Pension schemes far from investing responsibly, new league table shows

Despite improvements, major pension schemes still need to make progress when it comes to responsible investment, a new league table compiled by the charity ShareAction shows.

UK pension funds hold around £3 trillion of assets, with the 10 largest exceeding £203 billion. As a result, ShareAction argues that these schemes are one of the largest and most influential investors and should act responsibly. The report measures how much pension funds take environmental and social governance (ESG) issues into account and how they engage with shareholders.

Despite all but one of the 26 occupational schemes surveyed having a specific responsible investment policy, the study found these were often poor. Six polices made only vague and generic statements whilst 10 failed to provide information to members on how they vote at company annual general meetings.

Catherine Howarth, chief executive ShareAction, said, “The pension schemes we’ve ranked are amongst the UK’s most powerful investors, but our survey shows that only a few take that responsibility seriously.

“If big employers like GlaxoSmithKline and Barclays want to improve their corporate social responsibility (CSR) credentials, they need to make sure their pension schemes invest in a way that is transparent and accountable.”

There was found to be a huge disparity between the leaders and the laggards. The top three – from the BBC, BT and the Universities Superannuation Scheme (USS) – each scored over 80%. In contrast, those at the bottom – Rolls-Royce, GlaxoSmithKline and Barclays – only scored one point between them.

ShareAction also found that among giant, older pension schemes, transparency to members remained particularly poor. The Master Trusts that have come into existence since the pensions auto-enrolment have started to show more interest in communicating with their members, with half publishing the top 10 holdings for each fund they provide.

Howarth added, “There’s absolutely no excuse for schemes keeping members in the dark about how their money is managed. It’s encouraging to see some new pension providers using social media to connect with their members, not least to demystify pensions jargon but also so as to conduct regular member surveys.”

Further reading:

Pensions Trust boosts responsible investment credentials with climate policy

The pensions timebomb: 11m at risk of poverty in old age

Public sector workers let down by ‘dodgy pension investments’, say campaigners

Dutch pension fund ABP divests from troubled Fukushima firm

Danish pension funds quit Principles for Responsible Investment