Stockholm (NordSIP) – A newly published report from the International Transport Worker’s Federation (ITF): Who’s Responsible? Pension Funds and Respect for Workers’ Rights – has found that European pension funds are increasingly working to protect workers’ rights ahead of retirement through responsible investment policies – with the caveat that they could be doing more.
The paper, written by Tom Powdrill, RI coordinator with ITF, examined 100 of the largest pension funds in Europe supporting workers’ rights and examined their responsible investing policies, Chief Investment Officer reports. The paper finds that:
- Most pension fund policies, particularly in the Nordics (Denmark, Sweden) and countries like the Netherlands, refer to international standards that include labour rights, such as ILO (International Labour Organization), the UN Global Compact and other core conventions, representing €2.68 trillion in AUM, or 63% of the examined funds.
- Nevertheless, the remaining third of the funds, representing €985 billion, make no reference to international standards.
- The UK is the main culprit, accounting for two-thirds of the funds in this group, or €684 billion, that do not refer to workers’ rights. “This is particularly worrying given that the UK has the largest pool of retirement assets in Europe, and the second largest in the OECD,” according to the paper.
- “Capital Strike”, where funds respond to concerns about companies’ treatment of workers, is increasing in power and prevalence. Funds representing €2 trillion won’t invest in Wal-Mart, for example, while funds representing €287 billion refuse to touch Ryanair, the paper finds.
- 42 of the examined funds have policies to exclude stocks if they “failed to comply with the fund’s policy or are unresponsive to engagement.” 24 of the funds have excluded either Wal-Mart or Ryanair due to labour-related concerns.
“Pension money is not gifted. It’s the hard-earned product of hard work and industrial negotiation, and is a deferment of wages that workers decide to make to secure a dignified and decent retirement. It has to be put to work itself in a way that respects that source,” said ITF president Paddy Crumlin in a press release. “It is only right that it helps build sustainable and collective futures, and that it does so ethically. It is morally inconceivable that it should be invested in companies that attack the rights of the very workers paying towards these pensions. This new research has identified much good practice, but it has also revealed a gap that the pension fund industry must move to close.”
Research paper author Tom Powdrill noted that pension fund investing has a current and future role in protecting the financial security of pensioners by investing in companies currently engaged in ethical business practices. “The ITF applauds the widespread take up of responsible investment policies by pension funds. They’re a key form of social responsibility – and an implicit recognition that funds play a part in assisting workers both before and after retirement,” Powdrill said in his own press release. Conversely, retirees are precluded from enjoying their retirements to the fullest extent where, for example, pension funds invest in companies that violate worker and consumer rights or endanger the environment.
Picture (c) – aboutpixel.de Martin-Wimmer