Top UK Corporate Pension Funds named in UKSIF report

The British Telecom Pension Scheme, Friends Provident Pension Scheme and Stagecoach Group Pension Scheme were named as the leading UK corporate pension funds in their approach to responsible investment in the first report ranking the pension funds of the UK’s Corporate Social Responsibility (CSR) Leaders.

The report Responsible Business: Sustainable Pension - How the Pension Funds of the UK’s Corporate Responsibility Leaders are approaching responsible investment by the UK Social Investment Forum (UKSIF), the membership body for responsible investment, considered the responsible investment practices of the pension funds of UK companies listed in the FTSE4Good UK Index and in the Carbon Disclosure Project's Climate Disclosure Leadership Index.

The survey found also that for participating funds:

Nearly two thirds of funds with a Responsible Investment (RI) policy give at least “some significance” to alignment with the plan sponsor’s CSR/Sustainability policies; this includes one fifth of funds that give this “great significance”.

Two out of three corporate pension funds of CSR leaders have trustees who believe that environmental, social and governance (ESG) issues can have a material impact on the fund’s investments in the long term.

Nearly three quarters of participating funds have an RI policy. This rises to over four fifths for larger pension funds. It is two thirds for smaller funds.

Where an RI policy has been adopted, it is almost always applied to equities. Where other asset classes are used, the RI policy is applied in about half of the cases.

Three quarters of funds said that they monitored whether their RI policy was being carried out, and two thirds said that RI featured in the assessment, appointment, evaluation or remuneration of fund managers.

In the ranking of funds into five categories according to their implementation and communication of responsible investment, one third of participating funds were placed one of the top three categories.

But the report raised questions about the commitment to transparency of the pension funds of the UK’s CSR leaders compared with their plan sponsors. Less than half of the participating funds actively communicated their RI policy and how it is implemented to members and other stakeholders, while over half of the 278 funds originally approached declined to participate in the survey.

The report was produced as part of the UKSIF Sustainable Pensions Project that seeks to encourage the pension schemes of companies which are leading the way on corporate responsibility practices to consider environmental and social issues also in their pension fund investment decisions. It was developed with funding from Esmée Fairbairn Foundation and support from FTSE Group.

Michael Deakin, Chair of UKSIF’s Sustainable Pensions Advisory Board, said “For the first time, we have data on the existence and application of responsible investment policies in the pension funds of the UK corporate sector. Pension fund trustees are facing many challenges but I hope that, by highlighting how the best in class are performing, other funds will look to make progress in this regard.”

Will Oulton, Head of Responsible Investment, FTSE Group said “UKSIF’s Sustainable Pensions Project provides a welcome and credible benchmark for corporate pension funds in assessing their RI approaches. Credible benchmarks can change behaviours as FTSE have seen with the constituents of the FTSE4Good Index. I believe that this project will similarly provide encouragement for corporate pension funds to further implement RI practices into their investment processes.”

Penny Shepherd, UKSIF’s Chief Executive, said “We would like to repeat this survey regularly and hope that this will enable UK corporate pension funds to track their progress over time.“