The article in the url below poses a great question:
“It's easy to identify the companies that are leading the way on climate change. But how many of them follow the same principles when it comes to their pension funds?”
If a firm believes in an issue or way or running a company, why would it not extend those same principles to the management of one of its largest assets/liabilities?
“We often think of European companies leading the way on good environmental practices. But a recent report by Independent Capital Management AG, took a closer look at the pension funds of a number of Swiss companies, all of which are listed on the global Dow Jones Sustainability Index. Not one fund it looked at adopted the same stringent investment policies as its sponsoring company.”
The dissonance extends to some of the leading CSR brands:
“Catherine Howarth, the chief executive of ShareWatch said: ‘In the UK there are a numerous examples of companies who have developed good corporate social responsibility policies, but their pension funds are not fully engaging with these issues at present.’ She said this applied to companies such as Unilever, GlaxoSmithKline and Kingfisher, which owns B&Q – all of which run substantial pension funds. … She added: ‘Unilever is a good example. Paul Polman [the chief executive] has talked seriously at company AGMs about the financial risks of climate change, and the business benefits of taking a sustainable approach. If it is in the best interest of the company to do this, then surely these same arguments apply to the pension fund?’”
Good point. In general, the way companies have treated the duty placed in them by employees regarding their pension funds leaves much to be desired. As a result, I would extend the CSR components of this issue. In addition to responsible asset management and investing principles, what about a minimum standard for the percentage of the pension that is funded (i.e., the percent of pension obligations to current and future retirees)? Also, what discount rate do firms use in calculating the annual funds paid into the scheme? And, at the most basic level, which firms still have defined benefit (rather than defined contribution) plans?
Have a good weekend and Happy Thanksgiving to those of you in the US.
David
David Chandler & Bill Werther
The library of CSR Newsletters are archived at: http://strategiccsr-sage.blogspot.com/
Do Sustainable Companies Offer Sustainable Pensions
Do Sustainable Companies Offer Sustainable Pensions
By Emma Simon
September 19, 2013
The Guardian
