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UK pension funds push for responsible investment

13 February 2015

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Sixteen of the UK's largest pension funds have joined forces to ensure asset managers fulfil the promises they make regarding responsible investment.

Schemes including the BT pension scheme, BBC Pension Trust and the Unilever pension fund have published a guide with the National Association of Pension Funds (NAPF) to make sure fund managers deliver on the responsible investment assurances they make when they are awarded a mandate.

The guide was drafted following a number of roundtable meetings between the funds and open consultation with fund managers with the aim of improving how asset managers report back to investors on the ways they are integrating environmental, social, and governance factors into their investment decisions.

It should be used as an engagement and monitoring tool for both current and prospective fund managers, and will be especially useful to smaller pension funds.

Daniel Ingram, head of responsible investment at the BT Pension Scheme, said: "What asset managers tell us what they are going to do in terms of responsible investment when they pitch for our business and what they actually deliver can be very different.

"We hope this guide will encourage fund managers to report back and tell us the thinking that went on when they did or did not buy a particular stock."

The idea for the reporting guide came after the 16 investors, which are responsible for more than GBP 200bn of assets, asked each other to come up with examples of asset managers doing a good job of reporting on their activities regarding ESG factors. None could be found.

Mark Chaloner, assistant director of investments at the West Midlands Pension Fund said: "This landmark guide sends a clear signal to the marketplace as to what asset owners expect regarding their responsible investment reporting from fund managers of listed equity."

The other large investors involved in publishing the guide include: the Environment Agency Pension Fund, Kingfisher Pension Fund, the Pension Protection Fund, the Northern Ireland Local Government Officers' Superannuation Committee, USS Investment Management and Railpen.

In a statement, the 16 investors highlighted that the guide had been developed as part of wider efforts to include responsible investment in fund manager selection and monitoring processes.

First published 12.02.2015