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Thought Leaders
Ottmar Edenhofer
Ottmar Edenhofer
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Perspectives
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Public Policy
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Pension Investing with a Conscience - Project M
Growing public concerns about climate change and resource scarcity are significant factors in a shift of attitudes toward responsible investment among pension funds and institutional investors.
in this article
A recent ZEW/Allianz survey affirms that SRI investing is likely to continue growing
The shift in attitude is driven by public opinion and the long investment horizon for pension funds
Many believe pension funds will become more active owners in the companies they invest in

Social and corporate governance issues, particularly sparked by the financial market meltdown, are also driving interest. A recent survey by Allianz Global Investors in cooperation with the Centre for European Economic Research (ZEW) affirms that socially responsible investing (SRI) is likely to continue growing. A majority of the pension specialists interviewed said that SRI will play an increasingly important role in pension fund investments.

Experts in France (86%) and the Netherlands (79%) are particularly convinced that pension funds will increasingly invest in accordance with SRI criteria. In contrast, about 60% of British experts remain doubtful or neutral about the growth of SRI in their country.

 

RESULTS ARE SET AGAINST A background where responsible investment initiatives and projects are thriving. For example, signatories to the United Nations Principles for Responsible Investment (UNPRI) have grown to represent more than $18 trillion in assets. UNPRI, launched in 2006, calls on institutional investors to incorporate environmental, social and corporate governance issues into the investment process. Other SRI-related initiatives, such as the Carbon Disclosure Project (CDP), are thriving.

Among the main drivers of the move toward SRI are many pension funds, as their long investment horizon makes them particularly aware of the impact of long-term trends. According to the survey, about half of those who responded do not believe growing demand stems from the expectation of higher returns or a reduction of risk. Most respondents believe it is being driven by public opinion. Other important drivers are trade unions, followed by plan participants and plan sponsors.

The most important SRI criteria are environmental factors, closely followed by social and governance aspects. Ethical and religious criteria, in comparison, are considered the least important. There is also broad consensus among experts that investments following these standards will expand to asset classes other than equities. A majority further believe pension funds will become more active owners in the companies they invest in.

Published by PROJECT M in November 2009

(Photo: Christopher Griffith/gallerystock) 

  
FURTHER INFORMATION
The study can be downloaded from the research page on this website.
To the research page