March 2007 - FairPensions persuades Lewisham to adopt responsible investment
We are delighted to announce that the London Borough of Lewisham's pension fund has decided to adopt a policy of responsible investment.Following briefings and a presentation by FairPensions, Lewisham's pension fund committee have decided to survey all their members about ethical issues. This move will make them one of the only UK pension funds to give their members a say in how their money is invested. They will also join the Local Authority Pension Fund Forum, which uses their collective shareholder influence to promote high levels of corporate social responsibility among the companies in which they invest.
January 2007 - FairPensions becomes a charity
We are extremely pleased to announce that in January this year FairPensions was finally awarded charity status. This is a fantastic achievement for FairPensions, which is now the first charity of its kind. This recognises - for the first time - the benefits that shareholder activism can have on human rights, development and environmental sustainability.
Becoming a charity also means that FairPensions can now claim Gift Aid on all our donations - which will help us to substantially increase our funds. If you are, or have been, a donor, and have not filled out a Gift Aid declaration, please fill out the form enclosed. This will allow us to reclaim tax on any past donations.
USS Expands RI team
In recent months, we have been urging USS to strengthen their Responsible Investment team - as an essential step toward increasing their capacity to engage with companies. Following assurance that USS' Senior RI Advisor would be replaced, FairPensions was pleased to hear that an additional Responsible Investment position has also been advertised. This expansion of staff specifically dedicated to RI will be vital for USS to implement its policy effectively. Encouragingly, the job description for these roles highlights an RI strategy "based on active engagement with companies and assets in which the fund invests." Whilst we recognise that more staff may still be needed, we welcome this as a step in the right direction and will be watching closely to see if it yields results.
FairPensions Scores Victory at the BBC
After lobbying the BBC Pension Fund for almost a year, we are pleased to report that the scheme has become one of only four UK pension funds to adopt the UN Principles for Responsible Investment. The scheme is one of the UK's 'big 20' pension funds, with almost 60,000 members, and is worth more than £7.5 billion. It joins USS in signing up to the UN initiative, that commits investors to taking environmental, social and governance factors into account in their investment decisions.
The scheme has also hired Hermes Equity Ownership Services to handle its engagement activities. Hermes has experience of active shareholder engagement, so this is an opportunity for the BBC scheme to begin using their investment power to improve corporate behaviour on human rights and environmental issues. FairPensions will be continuing to put pressure on the BBC pension scheme to make sure this happens. At the same time, we are launching campaigns aimed at other large pension funds in a drive to strengthen the capital power available to challenge corporate abuse.
National Pensions Savings Scheme: Fighting for Responsible Investment for all
New pensions regulations proposed by the government are set to create a new National Pensions Savings Scheme (NPSS). Anyone who does not belong to a workplace pension scheme will be automatically enrolled and employers will be obliged to contribute, unless an employee opts out. FairPensions is currently asking the government to make sure that all funds associated with the NPSS are invested responsibly, in a manner that contributes to the maintenance of people's rights and the sustainability of the environment.
We have expressed our concern that responsible investment has been referred to only as an 'option' under personal accounts. This will give people an option of picking a specifically screened ethical fund, but will mean that only certain concerns are accounted for (typically screened funds exclude 'unethical' sectors such as tobacco, arms or gambling, but take no action against companies in other sectors that may be abusing human rights or the environment). Importantly, it will exclude millions of people who will not have the knowledge and information necessary to make an informed choice. It is vital that all the schemes holdings subscribe to an active responsible investment policy, which must include shareholder engagement with companies that have poor social and environmental records. This is especially important with regards to any 'default scheme'.
It is likely that around 10 million people will be entered into a scheme of this kind. FairPensions is pushing to ensure that, at a minimum, all fund managers associated with the scheme sign up to the UN Principles for Responsible Investment, and agree to specifically implement clauses on active investment and transparency.
USS reviews RI
In our last update we reported that, as a result of our lobbying, USS had agreed to address areas of their SRI policy that needed improvement. The results of their 5 year review will be reported in early November; FairPensions is hoping to see increased engagement on environmental and social issues and transparency about their engagement efforts. We will let you know the outcome of this review, and will continue to lobby USS based on the results.
Actionaid Joins FairPensions
FairPensions is very pleased to announce that ActionAid has decided to become one of our member organisations. ActionAid describe themselves as "a unique partnership of people who are fighting for a world without poverty, in which every person can exercise their right to a life of dignity. We work with poor and marginalised people to help eradicate poverty by overcoming the injustice and inequity that cause it."
ActionAid has a strong record of campaigning to make companies accountable for the impacts of their businesses in developing countries. We look forward to working with ActionAid to promote responsible investment and ensure that investors exercise positive influence on global justice. For more info on ActionAid see www.actionaid.org.uk
Arms Campaign Launches Universities Initiative
In November, Campaign Against Arms Trade (CAAT) will be launching a Universities Clean Investment campaign, focusing on arms company investments by UK universities and calling for disinvestment. Working with students and staff, CAAT will argue that barriers to arms-based responsible investment polices are illusory, and that such policies can be financially beneficial, stating that "Universities can, and should, fulfil their fiduciary duty whilst also ensuring investments do not have a negative impact globally."
CAAT have set up a website and email address for interested staff and students at www.caat.org.uk/getinvolved/universities/ and universities@caat.org.uk.
CASE STUDY
RI in practice: how WWF used investor power to make housing more sustainable
"Investing in sustainability" - WWF and Insight Investment
In 2003 Insight Investment, the asset management arm of HBOS plc, joined forces with WWF as part of their 'one million sustainable homes' campaign. The results proved highly successful, highlighting the importance of large investors in changing company behaviour.
UK homes generate nearly 30 per cent of the UK's carbon dioxide emissions, so changes in the housing industry are vital to fighting climate change. Poor housing also has an enormous social cost, adversely affecting people's mental and physical health. WWF and Insight benchmarked the sustainability performance of the top 12 FTSE listed house-building companies, and engaged with them on how they could improve their performance. Their analysis demonstrated that the majority of house-builders were failing to address their sustainability impacts adequately.
Yet the results of their engagement were positive. Many of the house-builders were willing to review their practices, and when the second benchmark report was published in 2005, the house-builders' scores had improved significantly; rising from an average of 47% to 68%. Working with a large investor like Insight gave WWF access to the construction industry that they would not have had by themselves. A large part of the problem faced in making housing more sustainable is the perception by companies that investors are not interested in sustainability, but just want a quick return and maximum profit. Investor involvement in this project was a vital part of removing this barrier, and beginning to change the attitudes and practices of the house-builders.
From an investor point of view this project not only helped Insight to demonstrate a commitment to responsible investment but also helped to build an understanding of the business implications of sustainable housing issues. As public concern for the issue grows, and legislative changes begin to happen, this is something that will prove vital to the sector financially, and thus to its shareholders.
Whilst there are still vast improvements to be made, positive steps have been taken that will help companies deliver better environmental and social outcomes and add value to their businesses.