The integration of ESG criteria in investment strategies of Italian pension funds seems to overall be on a positive path, however, shortfalls have emerged on the current strength of environment and social policies, and reporting.
“There is still a way to go, especially in terms of reporting (for example on the Principal Adverse Impact statement) and the ESG identity of pension funds,” Riccardo Realfonzo, coordinator of the technical committee of pension funds association Assofondipensione told IPE, commenting on research conducted with ET Group, a company specialising on sustainability.
The research showed that 82.14% of pension funds that were members of Assofondipensione surveyed this year do not plan to introduce a form of reporting of ESG results achieved to ensure full transparency towards stakeholders, and none plan a mechanism to involve members to discuss ESG topics.
This year’s research features a section on “ESG identity”, pointing also to the role played by social and environmental policies in pension funds that are members of Assofondipensione, and shaping their ESG strategies.
The analysis revealed that 64.29% of the pension funds surveyed consider ESG criteria key to reinforcing the fiduciary duty towards members, but none of the schemes has a system in place to monitor and verify the “ESG skills” of members of their boards of directors.
Only a small minority (14.29%) said that the members of their boards of directors receive specific training on ESG matters. Additionally, 39.29% of respondents said they had laid out sustainability policies, 17.86% had policies on conflict of interests in place, and 14.29% already run policies on ESG risks.
The survey also noted that 79.17% of the schemes surveyed have not formally defined their own ESG “purpose”, nor have made it public in their corporate communications.
In general, however, the results of the year’s survey show that Italian pension funds are aware of the importance of ESG as an important element for expanding membership, Realfonzo said.
“As the data show, the integration of ESG in the investment policies of the occupational pension funds associated with Assofondipensione is proceeding following a very positive trend,” he added.
The analysis showed that 60.17% of schemes have drafted an ESG investment policy, as of this year, up from 37.50% in 2019. However, there is still a majority (60.71%) that lacks any procedure to profile ESG asset managers, and 67.86% do not publish ESG investment impact reports.
Realfonzo said that, looking at the results of the study, manager selection is closely linked to structural ESG assessments, including a manager’s expertise, ESG corporate culture, and overall offering.
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