Pension Protection Fund bolsters responsible investment framework

The Pension Protection Fund (PPF), which assists pension scheme members in the event of insolvencies, has launched a reinforced responsible investment framework to implement its ethical policy among asset managers.

The PPF’s framework already includes several norms aligned with the principles of responsible investment and environmental, social and governance (ESG) factors.

Executive director of financial risk, Martin Clarke, who is also chair of the UK Sustainable Finance and Investment Association (UKSIF), said, “Over the last three years we have seen a vast improvement in the way that our external managers are adopting RI [responsible investment]. Thirty per cent of our managers are now rated higher on their commitment to RI than when we first hired them.”

He added, “With our investment portfolio expected to rise to £22 billion in the next three years, our commitment to responsible and sustainable ownership becomes even more important.

“That is why we have reinforced our framework to better help us define our new voting policies, ensure great accountability and vastly improve the way in which we monitor our external managers.”

The new framework focuses on new voting policies and accountability, and on advanced monitoring of external managers.

The PPF’s new Statement of Stewardship Principles lays out the behaviour of the PPF as an owner of those companies in which it has shares.

The statement says, “In order to fulfill our commitment to exercising ownership rights cost-effectively across a growing global listed equity portfolio, we have appointed an external agent to vote our shares, monitor portfolio companies for environmental, social and governance risks and, where concerns arise, engage with company management on these concerns.”

The world’s most transparent pension funds were honoured for their commitment to responsible investment at an event in London earlier this month.

Further reading:

Most transparent pension funds honoured at responsible investment event

UK pension funds to look at social impact investment

FairPensions to host training event for responsible investment lobbying

Pension fund trade body launches responsible investment guide

The Guide to Sustainable Investment 2013