Engaging with pension fund members about responsible investment and ownership activities could play a key part in getting them enthusiastic about saving, according to a new report from ShareAction.
The report, Our Money, Our Business, which was funded by the Nuffield Foundation, outlines the steps needed for schemes to improve accountability and transparency and give savers a voice, particularly around ESG (environmental, social and governance) issues. It is accompanied by a best practice guide.
Catherine Howarth, ShareAction at Chief Executive said: “From executive pay to payday lenders like Wonga, the public has never been more interested in the behaviour of listed companies. Yet most see themselves as passive bystanders in this drama, rather than indirect owners with a stake in the system.”
“Engaging with savers about stewardship and responsible investment activity represents an enormous opportunity. In contrast to the dry and off-putting nature of much of the language used in pensions, this has the potential to tell savers a positive story – about the stake in the economy their investments represent, and about how their scheme is working to protect long-term value while acting on issues they care about.”
In the report, ShareAction makes the case for greater communication and consultation with scheme members about stewardship activity and assesses some common legal and practical objections. The accompanying best practice guide highlights the UK schemes that are leading the way, as well as providing examples of good practice both from overseas schemes and from other parts of the finance sector.
Among the examples of good practice highlighted by the guide are the Environment Agency Pension Fund’s Responsible Investment Review, the Pensions Trust’s member survey on ethical investment and Heineken’s pioneering approach to transparency and member engagement in contract-based DC. The guide also highlights examples from overseas, such as Danish fund PKA’s system of ‘member delegates’ who are consulted on key issues such as the development of the SRI policy.