UK pension funds are pledging their support for new draft guidelines which would force FTSE 100 companies to adopt socially responsible practices.
The SRI best practice guidelines - which have been drawn up by the Association of British Insurers (ABI) - will call on companies to set out what account they take of social, ethical and environmental matters. Firms will also be asked they have identified and assessed the related risks to their company’s value.
The guidelines - which are currently being discussed by ABI members - are due to be published in October.
And the National Association of Pension Funds (NAPF) has said that it will be looking to adopt the guidelines once they are published.
The guidelines will be based on those drawn up by the SRI Forum – a cross-industry group but primarily fund managers – which looked to create a uniform level of company transparency.
NAPF director of voting issues services John Rogers, who was a member of the original SRI forum, said the success of the existing ABI/NAPF best practice independence test for non-executive directors was proof of how powerful the new guidelines could be.
Industry figures have called for guidelines to help companies formulate disclosure policies, and many are hopeful that ABI guidelines will provide a benchmark for companies to follow.
Morley Fund Management’s head of corporate governance, Anita Skipper, said: “The guidelines could become a minimum standard of socially and environmental policy for which companies have to comply to.
“Pension funds trustees can use the guidelines as a minimum disclosure requirement for the companies that they invest in.”
ABI head of investment affairs Peter Montagnon said: “What we are trying to do is increase transparency to help investors make up their own mind, but also to promote responsible behaviour by companies.”
Montagnon said that the government’s requirement for pension trustees to acknowledge SRI in their statement of investment principles was a major factor in the ABI initiating the guidelines.
He added: “There is greater pressure being brought to bear on companies and institutions by NGOs and other stakeholders. It is sensible that we should set out how to approach this.”
By David Rowley
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