UK - Socially responsible investment experts have hit back over claims the style may be a "dead duck".
And they have blamed consultants for the “knee-jerk” response they give to pension schemes on the asset class.
SRI experts spoke out after it was revealed that the £530m Shropshire County Council Pension Fund had reintroduced tobacco stocks into its pension portfolio when trustees were told that they could be sued for failing to get the “best financial return”.
Claros Consulting head Mark Mansley said: “To my mind it shows what a poor service many of the pension consultants provide – basically just giving a knee-jerk reaction rather than actually thinking the issue of SRI through.”
Mansley said the question pension schemes needed to consider when excluding any company was to decide whether its stock was seriously affecting the portfolio choice.
He claimed legal rulings had shown this was unlikely from limited exclusions of tobacco and arms companies.
He urged consultants to address socially responsible investment more seriously as it would become an increasingly important area of investment.
Mansley’s views were backed by the Trades Union Congress. Its network of member trustees believes SRI and corporate governance issues have a significant impact on a firm’s performance and that pension fund pressure can change companies’ behaviour.
TUC investment officer Tom Powdrill said: “We expect to see the development of a more active, and activist, shareholder culture in the UK over the coming years and indeed hope to help foster such a culture.
“The TUC would not advocate screening as there are many trade union members in the types of companies that are typically screened out.
“Adopting an engagement policy avoids many of the problems of screening as the underlying investment portfolio is unchanged.”
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