The UNPRI and UN Global Compact released a guide on April 20, Aligning Values: Why Corporate Pension Plans Should Mirror Their Sponsors, which calls on CEOs to ensure that corporate pension plans adopting RI policies, fulfil fiduciary duty, manage regulatory risk, boost corporate sponsor credibility, and highlighting concrete benefits, including improved investment performance. The study includes case study examples of companies who have taken steps to make their plans sustainable and recommends steps for CEOs to take ensure their pension plans invest responsibly – such as signing up to the PRI.
The global corporate pensions industry is estimated at the multi-trillion dollar level, with US$ 2.9 trillion in U.S. assets in private-sector defined benefit plans by the end of 2016 alone.
“While significant numbers of institutional investors and corporations are now integrating environmental, social and governance factors, corporate pension plans remain a sleeping giant,” according to UN Global Compact CEO Lise Kingo and UNPRI Managing Director Fiona Reynolds.
And echoing remarks made by Peter Thompson, President of the UN “Sustainable Development Goals Financing Lab”, to the UN General Assembly earlier in the week about the need to bridge private and public sector skills, resources and interests, Kingo and Reynolds called the corporate pension industry indispensable to the realisation of the SDGs.
“When we consider the capital that will be needed to achieve the Sustainable Development Goals, the multi-trillion dollar corporate pension industry needs to be activated to join other actors in private finance that have aligned to the 2030 agenda,” they said.
Of the 1,700-plus UNPRI signatories, less than 50 are corporate plans.
“We strongly believe that corporate plans need to align with their sponsors’ sustainability philosophy. Otherwise, investment decisions will be out of step and could actually be undermining the stated aims of the sponsoring corporation’s strategy,” said Kingo.
“The evidence and proof now abounds: adopting responsible investing practices is not only consistent with financial fiduciary duty, it unlocks financial and social capital over the long term. Failing to address ESG issues and sustainability factors poses material risks to any pension plan,” added Reynolds.
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