GLOBAL - Corporate pension schemes are lagging behind other categories of asset owners in signing up to the United Nations Principles of Responsible Investment, a consultant claimed.
Watson Wyatt investment consultant Jane Goodland said corporate funds represent only a small share of the total number of asset owners signatories to the UN PRI, although the initiative "has done a good job" in attracting members.
Goodland said: "While public schemes are signatories, corporate schemes appear less interested. They have other priorities, such as funding deficits, so addressing ESG issues is not necessarily their top of their agenda."
She added: "Public pension funds such as the Universities Superannuation Schemes in the UK - which is a member of UN PRI - get greater stakeholder and media pressure, while the corporate funds typically feel less compelled towards responsible investment."
Goodland explained the transition from defined benefit to defined contribution schemes compounds this issue. She said DC members were "less engaged" and often less demanding on the scheme's investment choices.
In addition, according to the 2009 UN PRI Progress Report, asset owners - which include both public and corporate pension funds - are outnumbered by asset managers as signatories, with often stark differences.
Brazil, Scandinavia, the Netherlands and Australia/New Zealand are the only ones to have more asset owners signatories than asset managers.
Goodland said these results point clearly to the limited traction of the PRI initiative in the US - where there are only 31 signatories in total, which lags smaller countries or geographical areas, such as the UK and Australia/New Zealand.
She also said pension funds should be clearer about their expectations of asset managers around responsible investment.
"Unless responsible investment forms an explicit part of the investment management agreement it's unlikely to be automatically delivered. A lot of schemes simply aren't aware what their managers do in this respect," she added.
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