Social responsible investment, decent work and pension funds
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Lastly, mention should be made of the UNPRI’s “Engagement Clearinghouse”. This is a forum designed to help signatories to draw the attention of other shareholders to specific
issues and promote collaborative actions. It enables them to share information about collaborative engagement activities they are conducting, or would like to conduct.
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Main challenge The parties have to reach an agreement before engaging with the companies. It can
therefore be a time-consuming approach, especially if the initiative is conducted by a large number of participants.
3.6. Combining strategies
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A s a logical development, most investors use a mix of the different strategies listed here. It is
accepted that these strategies are not mutually exclusive: rather, they are seen as complementary. As one can see in figure 2. Eurosif, 2004-05, p. 18, these strategies
address SRI issues at different moments in the lifetime of the investment process. Most investors use a mix of these strategies. For example, it is common to see an institution first
perform a negative screening, in order to avoid sectors in which it does not want to invest. Then, there is a positive screening phase, quite often a “best-in-class”, to identify the
“champions” in each sector. And once the investor has invested in the companies, it engages with them on an ongoing basis.
Main challenge Combining strategies is definitely a resource-consuming approach, involving the need to
provide large engagement andor analyst teams. Since it encompasses different strategies, it has to deal with their respective downsides, as well as the benefits.
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UNPRI Clearinghouse website, http:www.unpri.orgareas-of workcollaborations 19.09.2012.
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Social responsible investment, decent work and pension funds
4. Good practices
In the following pages, an examination will be made of five case studies, ranging from Thailand, Brazil, the United States, Norway, and South Africa, each of which will provide
concrete examples of what a socially responsible pension fund can do. It will be seen that elements of the business case, as well as the concepts introduced above, are found in the
case studies.
4.1. Government Pension Fund Thailand
The Government Pension Fund GPF is one of the largest institutional investors in Thailand. It operates as a body autonomous of the Ministry of Finance.
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4.1.1. The rationale behind responsible investment
As one of Thailand’s largest funds and a long-term investor, the GPF plays a central role in the development of the Thai economy. The Fund considers the introduction and promotion
of good investment practices in Thailand to be one of its main goals. It also believes that the development of a sustainable pension system is good for fiscal management, that it will
help strengthen the Thai economy, and that its investment decisions will have a dual impact on both share prices and corporate and market practices.
In order to ensure its own credibility, GPF believes that it must guarantee that its own operations follow high standards of corporate governance. In this respect, the Fund sees the
benefits of good corporate governance as being bi-dimensional – with respect to both the Fund’s own performance and its role as a responsible investor, which takes into account
companies’ corporate governance practices in its investment decisions. The GPF’s investment policy is based on a series of guidelines, and its policy statements include CSR
guidelines including PRI principles, pension fund governance, proxy voting guidelines, and governance rating methodology.
4.1.2. Responsible investment approach
The GPF combines strategies in its approach to responsible investment by first practising negative screening, excluding companies if any of the following activities are evident:
Pollution and environmental problems; Breaches of intellectual property law;
Impediments to good morals and customs; Social problems and the endangerment of public security;
Questionable accountability. In an example of the GPF’s strategy, the Fund does not invest in the alcoholic beverages
sector as this runs counter to the values of most Thai people and the GPF does not wish to offend its beneficiaries.
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Information provided in this section comes from the UNPRI website, http:www.unpri.org; the Government Pension Fund website, http:www.gpf.or.thEngwhat.asp; and Responsible investment
in focus: How leading public pension funds are meeting the challenge UNEP FI, 2007.
