Pension funds committed to environmental investment

Environmental, social and ethical impacts will be factors influencing investment by some 90% of the UK’s largest pension funds following changes to pension fund regulations which take effect in July.

Under the new regulations, all pension funds will have to state whether they will take account of the environmental, social and ethical impacts of their investments.

A recent survey carried out by the environmental consultancy ERM reveals that 21 out of the UK’s 25 largest pension funds intend to implement Socially Responsible Investment (SRI) principles. Around 70% of the funds said they would implement SRI principles through active engagement rather than simply boycotting specific industry sectors such as tobacco and alcohol.

The companies surveyed represent nearly half of £800bn in UK pension fund assets, which makes up about one third of all investment in the UK stock market.

“If pension funds are going to seriously engage industry on issues on such issues as human rights, child labour and environmental pollution, they face a steep learning curve,” said ERM director Tom Woollard. “Not only are they going to have to decide what questions to ask companies, but also what they are going to do with the answers.”

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