Nearly half of the world’s largest pension funds report that they are incorporating ESG issues in the investment process, according to a report from the United Nations Conference on Trade and Development.
Approximately one-third of the funds studied are reporting ownership policy decisions related to ESG and are promoting RI practices and collaboration within the investment industry, and one-quarter of the world’s 100 largest pension funds have signed up to the United Nations Principles for Responsible Investment.
The findings suggest that commitment to responsible investment practices among large institutional investors has become common, states the Investment and Enterprise Responsibility Review.
About half the funds studied displayed some RI activity, and more than half of the assets managed in the sample were held by funds engaged in RI practices. “Large leading funds are more active in the area of RI and appear to be actively engaged in the mainstreaming of ESG issues.”
On the other hand, half the funds studied reported no RI activity whatsoever. “Given the emergence of these two groups … all institutional investors [should] be encouraged to formally articulate their stance on RI to all stakeholders. Such disclosure would be in line with the current disclosure practices of funds in other areas.”
The least found indicator of RI among the sample group was annual reporting, the report notes, with only 13 of the 100 funds reporting on RI practices.
The report notes that as RI becomes increasingly commonplace amongst institutional investors around the world, there is a corresponding increase in the level of investor pressure on companies to improve their ESG practices.
The report praises the Canada Pension Plan Investment Board, stating that the fund “excels in active ownership reporting.”
“With the assistance of ISS Governance Services (a division of RiskMetrics Group), CPPIB makes available via its website a searchable database of its proxy voting activity, which is implemented by ISS according to CPP’s voting guidelines.”
The top 100 largest pension funds in the world were extracted from Watson Wyatt’s Pensions and Investments list of the world’s largest 300 pension funds. The funds have combined assets under management of $8.6 trillion.
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