Responsible investment
Socially Responsible Investments
Since July 2000, all pension funds have to express a view in their Statement of Investment Principles on how – if at all – they consider social, environmental and ethical matters in their investment strategies. This area is sometimes referred to as “ethical investing”. It requires the Scheme to reveal how it assesses investments in, say, tobacco or arms companies; cosmetic and drug manufacturers that use animal testing; companies that pollute the environment; and those that have operations in countries with a poor human rights record. In considering these issues the Trustee has to remind itself that its primary objective and, indeed, legal obligation is to ensure that the Scheme’s assets are invested so that benefits due to each member can be paid as they arise. By specifically excluding any of the potential investments mentioned above, the Scheme may miss out on some of the better performing assets in the economy, with obvious consequences for the value and growth of the Fund. Having given due consideration to these matters, the Trustee has concluded that responsibility for day-to-day stock selection must rest with the Scheme’s investment managers. In turn, the investment managers must take social, ethical and environmental issues into account where they feel they will make a difference to
Voting Policy
In addition, pension schemes are also required to state their policy on the use of the voting rights that are available to them as significant holders of company shares. This is referred to as “corporate governance”. Having considered this issue, the Trustee has again concluded that the day-to-day responsibility for this should be delegated to the Scheme’s investment managers since they have contact with the companies concerned and can vote in order to get best performance from the shares held. They must report their actions to the Trustee who will monitor the decisions taken on a regular basis.
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