Big pension funds failing on SRI disclosure, says study

The UK’s largest pension providers are letting down their eight million clients on social and governance issues, says a new study.

FairPensions, which surveyed the ten largest contract-based providers, reports that most fail to deliver sustainable returns, monitor fund managers and publicly disclose holdings, policy and engagement information.

The group, which campaigns for responsible investment, says the increasing financial relevance of good stewardship is not being matched by the performance of some of Britain’s most influential organisations.

Funds including Aegon, Aviva, Legal & General Group, Prudential and Standard Life were criticised for not disclosing the holdings in their SRI funds to customers and for neglecting to request reports from external managers on their engagement with companies.

Of the ten, only Standard Life makes information on voting and engagement publicly available on its retail website.

Louise Rouse, FairPensions’ engagement director, said: “Given that consumers choose to invest in SRI funds specifically to ensure their investments reflect their ethical preferences, it is important that all holdings are disclosed to reassure customers that this is in fact the case. For example, many people might be surprised at the inclusion of oil companies in their ‘green funds’.

“Ultimately, it is savers who suffer when a pension provider fails to monitor their asset managers.

“As millions of people enter the pensions market for the first time, they will want to know that their pension provider, whether trust-based or contract-based, is protecting their best interests and taking environmental, social and governance issues seriously.”