NAPF survey says 72% of UK’s biggest pension funds to use RI criteria in manager hires

Trade body says funds also becoming more ‘hands on’ with investee companies.

Almost three quarters (72%) of respondents to a survey of the UK’s largest retirement schemes by the National Association of Pension Funds (NAPF) say responsible investment is currently or will soon be part of their selection process for hiring investment managers to run money. The results are the clearest sign yet that demand for responsible investment practices from asset managers is becoming mainstream practice amongst the biggest UK funds. The NAPF’s annual Engagement Survey carried out at its Trustee Conference received 40 responses from pension funds with more than £1bn in assets and a total of £260bn. Over half (55%) of the respondents also said they had signed up to the Stewardship Code, while a further 20% said they would in the future. The code sets out guidelines for investors engaging with companies and aims to boost long-term investment. The NAPF, the trade body for the UK’s £1 trillion pension fund industry, said the responses to the survey come against a backdrop of growing public concern over executive pay and responsible investingand showed that pension funds are becoming more ‘hands on’ with the companies they invest in. A third of pension fund respondents (31%) said they thought they could be more actively engaged in the companies they invest in. Half (48%) had reviewed their social, environmental & ethical policy within the last year, and only 13% said they didn’t have a policy. Over the last year 67% said they had increased the scrutiny of their investment manager’s approach to corporate governance, while 52% said engagement with investee companies had added value to the fund. Joanne Segars, NAPF Chief Executive, said: “The corporate governance climate has seen a big shift in recent years, and good engagement has risen up the agenda. Pension funds are responsible investors, and these findings show that they take engagement very seriously. The ongoing financial turmoil means the case for a long-term approach to investment is stronger than ever. Businesses should expect greater scrutiny from pension funds on everything from environmental strategy to boardroom pay.”
See downloadable documents for NAPF survey