The pension fund advisor community is failing to demonstrate their commitment to the stewardship code, the National Association of Pension Funds (NAPF) has said.

Despite an increasing desire for pension funds for good quality stewardship of their investments, the NAPF's annual pension fund engagement survey revealed that only 25% of respondents said that their investment consultants had raised the issue of stewardship with them this past year.

Of those cases, only 17% of respondents said that their investment consultants had suggested signing up to the stewardship code.

These low figures are in contrast to the fact that 96% of the respondents, up from 93% in 2012, said that institutional investors have stewardship responsibilities that include engaging with companies and voting shares.

The NAPF also revealed that there has been a 30% increase in pension fund signatories to the stewardship code since the beginning of 2013.

Joanne Segars, NAPF chief executive, said: "The vast majority of respondents to our survey believe good quality stewardship is important in protecting and enhancing the value of their investments.

"I am encouraged by the indications that the funds are continuing to embrace their responsibilities and drive a market for stewardship – I trust their investment managers will answer this challenge."

According to the survey results, 82% of respondents said agreed that environmental, social and governance (ESG) factors can have a material impact on their fund's investments in the long-term.

The survey also revealed that 71% indicated that that they take stewardship policies and activities into account when selecting asset managers.

Segars said: "Three years on from the formal introduction of the stewardship code, it is time all those who have signed the code support both its spirit and letter.

"Pension funds should be able to rely upon their key advisers to do so and therefore I urge the consultant community to reflect upon the evidence in our survey, which demonstrates the importance attached to stewardship by pension funds, and respond accordingly."

First published 26.11.2013

monique_simpson@wilmington.co.uk