UK - Pension funds are failing to recognise international standards on SRI and attitudes are "five years behind that of corporate governance issues", according to industry heavyweights.
Insight Investments and Isis Asset Management have both expressed concerns that SRI issues and their implications have not yet “sunk in” with pension funds.
Insight head of investor responsibility Craig MacKenzie said: “On conventional governance issues, pension funds say they believe companies should comply with the combined code, but if you ask them what companies should do on corporate social responsibility, they tend to be rather vague.”
He added: “SRI will catch up, but I think pension funds must explicitly recognise international standards.”
Mackenzie believes of all the SRI benchmarks, the Organisation for Economic Cooperation and Development guidelines are the broadest in scope and the most relevant to companies.
He recently addressed letters to all FTSE100 chief executives, and has received responses from 70 companies – 29 said they supported the OECD guidelines.
Isis Asset Management director of governance and SRI Robert Barrington said governance issues have been brought to the forefront of people’s attention because of recent high-profile scandals.
He said: “What makes legislators and regulators really take it on board, and the companies themselves, is some very evident examples of bad practice.”
He agreed a set of recognised guidelines is required and that currently the OECD guidelines are the frontrunner, but said the issue is more complicated than just developing straightforward benchmarks.
Barrington explained: “When one is talking about complex global issues such as labour standards, supply chains and climate change, you cannot make hard and fast rules about the way that all companies need to behave.”
*SRI pressure group Just Pensions found that a majority of trustees thought firms are not providing enough information over their SRI investment decisions.
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