About half of UK pension fund trustees are paying only lip service to socially responsible investing, according to a report published on Monday.
In a survey of 130 trustees, 50 per cent admitted that they did not have procedures for taking social, ethical and environmental factors into account when hiring fund managers.
Of those that did, three-quarters said that they did not have formal SEE procedures in place for the ongoing assessment of fund managers. But 56 per cent said they would be in favour of legislation forcing them to implement ethical policies.
The survey*, conducted by Ashbridge Centre for Business and Society and published by Just Pensions, a government-sponsored project, found that trustees considered corporate governance to be important – even if they disregarded it in practice. Some 42 per cent of respondents believed that good corporate governance would have a "substantial positive impact" on the market value of the FTSE 100 in the next f ive to 10 years.
Trustees were also confident that pension fund activism would improve companies’ performance on social and environmental issues. About three-quarters expected to see "some improvement " within three years.
Although the survey flagged problems with trustees’ commitment to corporate governance, it found evidence that companies had improved reporting of the environmental and social impact of their businesses.
* Will UK pension funds become more responsible? By Ashbridge/Just Pensions.