FairPensions' survey unveils truth - and risks - behind fund managers' "corporate responsibility" policies
15th October 2007
To read the Executive Summary of the report, click here.
The FairPensions' Fund Manager Transparency and Engagement Survey reveals that 75% of fund managers analysed do not publicly disclose any policies relating to environmental and social issues. This is despite the fact that many of the companies analysed have transparent corporateresponsibility policies in place. The survey covered the top twenty fund managers in the UK, who together manage 7 trillion pounds on behalf of clients including individual investors, occupational pension funds and charities.
Laggards in the league table include Scottish Widows and Barclays Global Investors, with Goldman Sachs and State Street ranked last.
Top performers include F&C, who are majority-owned by Friends Provident. F&C score 100%, followed closely by Hermes, Morley and Insight who all demonstrate a high degree of transparency and a concrete commitment to engagement on responsible investment.
Alex van der Velden, Executive Director of FairPensions said: "Investors need to know how fund managers are responding to the financial risks associated with such important issues as climate change and human rights. Environmental and social issues can lead to heavy losses which are then passed on to investors."
The Fund Manager Transparency and Engagement Survey also highlights how fund managers are ignoring the recommendations of their own industry body by not having a publicly available engagement policy.
Alex van der Velden comments: "Many of the fund managers in the survey are failing to meet the best practice codes set up by their own industry, such as the Statement of Principles of the Institutional Shareholders' Committee (2007).
"The survey shows that there has been little voluntary voting disclosure, which strengthens the argument for the UK government to exercise its reserve power under the Companies Act to make voting disclosure mandatory."
Alex van der Velden added: "We carried out this survey to probe under the surface of fund managers' public statements, and find out whether their activity on environmental, social and governance issues matched their public commitment.
"Our findings demonstrate a clear gap between rhetoric and reality. The survey demonstrates that although many organisations are getting to grips with corporate social responsibility, fund managers are still behind the times in this critical area."
Media enquiries to:
Zoe Butt, Mainland PR 0203 008 7409
Kelly Rawlinson, Mainland PR 0203 008 7406
Alex van der Velden, FairPensions 020 7403 7800
Duncan Exley, FairPensions 020 7403 7806 / 07847 006 253
Editors' Notes:
What is FairPensions?
FairPensions calls for responsible investment by UK pension funds and fund managers. As owners of approximately a fifth of the UK stock market, occupational pension funds alone are major shareholders, powerful enough to affect company behaviour on environmental, social and governance issues. FairPensions believes that investors should consider their customers' values - instead, many do not challenge those companies in their portfolios that undermine human rights and damage the environment.
FairPensions urges investors not to avoid certain industries, but to use shareholder power to improve company behaviour. Responsible investment has already had an impact: including helping persuade drug companies to lower the cost of AIDS drugs in southern Africa, and forcing companies to start tackling climate change.
FairPensions is the successor organisation to Ethics for USS (Universities Superannuation Scheme), a campaign which convinced one of the UK's largest pension funds to adopt a socially responsible investment policy. FairPensions is a registered charity.
FairPensions' activities fall into three main areas:
- Education: running awareness initiatives to promote ethical investment
- Research: monitoring the adoption and implementation of responsible investment by investors in the UK
- Advocacy: campaigning on behalf of pension fund members for the responsible investment of their pension
FairPensions is supported by a number of leading charities and trade unions, including Amnesty International UK, Oxfam, WWF, Unite, Traidcraft, NUJ, CWU, ActionAid, CAFOD, EIRiS, ECCR and Unison, as well as thousands of individuals - over 4,000 have registered already.
The Research
The 20 fund managers representing the UK's 20 biggest managers of pension fund assets and other assets held in the UK have been selected based on the 2006 Hymans Robertson Market Briefing Survey and the 2006 Investment Management Association Survey.
The report, "Fund Manager Transparency and Engagement on Environmental, Social and Governance Issues" looked specifically for client engagement reports, voting records or policies and previous responses to other surveys such as the UN Principles of Responsible Investment. All the information was then collated to create a benchmark on environmental, social and corporate governance issues.
Transparency
The Transparency section of the survey was designed to measure the levels of disclosure and openness shown by UK fund managers in relation to Responsible Investment. The information for this section was gathered and verified independently from the fund manager's public website.
Engagement / Integration
The Engagement/Integration section of the survey was designed to measure the extent to which UK fund managers engage with companies on ESG issues, and the extent to which ESG issues are integrated into the fund managers' mainstream business. Again, the information for this section was gathered and verified independently from the fund manager's public website. However, fund managers were also invited to provide any information that was not available on their public websites, such as voting data or client engagement reports, and this information was taken into account