UK - A group of responsible investment (RI) champions is clearly starting to emerge among UK corporate pension funds, according to the UK Sustainable Investment and Finance body (UKSIF).

The 2009 UKSIF Responsible Business: Sustainable Pension report - the second in a bi-annual series - claimed there was "clear and exciting evidence" that pension fund investors are promoting RI, and that trustee leadership is driving this change.

It suggested trustees, supported by increasingly well-informed investment consultants, are demonstrating how best practice in RI can be achieved in practical and affordable ways.

In its assessment of individual funds, the BT Pension Scheme retained its 'platinum' ranking for its attitude towards and practice regarding responsible investment, while The Barclays UK Retirement Fund, BP Pension Fund and HBOS Final Salary Pension Scheme all bettered their previous 'silver' by claiming a 'gold' ranking.

The survey covered the pension funds of UK-listed companies in the FTSE4Good Index and the Carbon Disclosure Leadership Index 2008 - both recognised as indicators of good practice in ESG issues if companies are included.

The survey found that 80% of the funds surveyed now have an RI policy, compared with 67% in 2007. And trustees for 75% of the funds surveyed, up from 67% in 2007, now believe that ESG factors can have a material impact on a fund's investments in the long-term.

Around 90% of funds with an RI policy said they exercised their shareholder voting rights last year, compared with only 75% in 2007.

And integration, screened options, collaborative initiatives and specialist mandates have all increased in popularity.

Approximately 80% of funds monitored whether their RI policy was being carried out, an increase from 75% in 2007. But only 10% of funds communicate their annual voting records, and even less than that disclose the fund's engagement strategy, said UKSIF.

Overall, 75% of repeat respondents achieved a higher score this year than in 2007.

On the basis of the survey results, UKSIF said RI leadership should come from trustees, while pension funds should increase their transparency on RI policies to beneficiaries and other stakeholders.

UKSIF also argued that pension funds should work together to agree best practice standards for the governance of responsible investment, and should identify stretch targets for RI improvement, as well as monitor their progress in achieving them.

"It is very positive to see such progress and co-operation among pension funds," said Rupert Clarke, CEO of Hermes Fund Managers who sponsored the survey with KBC Asset Management.

"We now need a similar commitment from their investment managers to re-examine investment processes and engage more effectively with companies on their behalf."

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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