UK and Canadian Pension Fund – Background
Comparative Study of U.K.
and Canadian Pension Fund Transparency Practices
3. Background
It is generally believed that the corporate sector in
the European Union has embraced corporate responsibility
(CR) to a greater extent than its counterparts in other
parts of the world. This is demonstrated by various phenomena
such as public attitudes to social and environmental issues
(Wheeler, 2003) and the comprehensive reporting many European
companies undertake with respect to their social and environmental
performance (Wheeler and Elkington, 2001).
Moreover,
socially responsible investment (SRI) is one of the
fastest-growing sectors of the European investment market.
According to the U.K. Social Investment Forum, the total
value of SRI assets in the U.K. increased from £23
billion in 1997 to £225 billion in 2001 (see Table
1).
|
Table |
|||
|---|---|---|---|
|
1997 |
1999 |
2001 |
|
|
SRI |
2.2 |
3.1 |
3.5 |
|
Churches |
12.5 |
14.0 |
13.0 |
|
Charities |
8.0 |
10.0 |
25.0 |
|
Pension |
0.0 |
10.0 |
25.0 |
|
Insurance |
0.0 |
25.0 |
80.0 |
|
Total |
22.7 |
52.2 |
224.5 |
|
Source: |
|||
It is possible that growth in SRI assets in the U.K.
has been spurred or at least accelerated by amendments
to U.K. pension fund legislation, passed in 2000. The
disclosure requirement under the amended 1995 Pensions
Act means that trustees must declare in their statement
of investment principles the extent (if at all)
to which social, environmental and/or ethical considerations
are taken into account in the selection, retention and
realization of investments; and the policy (if any)
directing the exercise of the rights (including voting
rights) attaching to investments. 5
In
this report, we explore the proposition that there may
have been a link between inclusion of SEE issues in
statements of investment principles in the U.K. and
the growth of total SRI investments. We do this by reviewing
the social and political drivers of reform in the U.K.
and the impact of the reform on the U.K. pension fund
industry. And we apply our observations to the Canadian
situation. However, we start our examination of the
U.K. precedent by considering the legal context for
reforms to the U.K. Pensions Act.
© 2013