Responsible Investor

RI global news round up

All the week’s RI news you might have missed.

Russell Investment Group has told Australian superannuation scheme trustees, which collectively run approximately $1.3 trillion, that incorporating sustainability factors into their investment decisions should not lose them money.
The consultant said superannuation funds should embrace a more positive approach to sustainable investing. In a paper reviewing an ‘exhausting but not exhaustive’ list of more than 40 empirical studies into the performance of ethical, SRI and sustainable investing approaches, Russell concluded that: “There is no necessary performance penalty from pursuing a sustainable approach; and there is unlikely to be a performance premium from pursuing a sustainable investing approach when account is taken of appropriate risk and style effects.” The consultant also said new research and evolving market practices had removed the traditional impediment of fiduciary duty from responsible investment.

Watson Wyatt says it has found a clear link between superior performance and strong governance within the world’s leading institutional investors. Research conducted by Roger Urwin, its global head of investment and Professor Gordon Clark of Oxford University, entitled Best-practice investment management: lessons for asset owners, involved case studies on ten funds across the world cherry-picked for their exceptional reputation and strong sustained performance. The ten comprised six pension funds, two endowments and two

sovereign funds, located in North America (5 funds), Europe (3) and Asia-Pacific (2). The funds ranged from around US$5bn to over US$50bn inassets.
The study identified five main areas where the ten funds excel: risk management, time-horizon focus on the long term, innovative capabilities, clarity of mission and effective management of external fund managers and other agents. Professor Clark said: “Institutional investment has huge significance for a society with aging demographics, because literally billions of individuals have large stakes in these funds and the consequences of their investment programmes. The governance of these funds should be a first order priority and poses a terrific opportunity for wealth creation.”

The International Corporate Governance Network (ICGN), a global group of institutional and private investors with assets of $15
trillion, has written to Peer Steinbrück, German finance minister, over fears that a proposed German law aimed at stopping hedge funds collaborating to break up companies could also affect shareholders discussing corporate governance issues ahead of company general meetings. The proposed new law, the Risikobegrenzungsgesetz, aims to stop shareholders acting in concert as occurred in the takeover battle for Deutsche Börse in 2006. ICGN said the current uncertainty was likely to lead to shareholders taking a cautious approach and either not engaging with one another or only discussing governance concerns that have been aired in the press.

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