We want to make it easier for pension schemes to invest with impact and support them in reducing negative impacts and risks like carbon emissions, biodiversity loss, poor governance and inequality that arise from their portfolio, something many pension schemes are keen to do. Going one step further, more and more pension funds are interested in investment opportunities that have positive impact and secure a competitive financial return and we want to help them explore those options.
What we are doing to achieve it
We are working across the pensions industry – with pension schemes, investment consultants, asset managers, policy makers, lawyers and industry experts – to debunk some common myths about impact investing. The most common misconception among pension trustees and advisors, who are understandably concerned about their fiduciary duties, is that impact investing means sacrificing financial returns.
Practical principles to empower pensions to invest with impact
Together with leading practitioners, we have developed four Impact Investing Principles for Pensions, which provide practical guidelines on how pensions can pursue an impact investing strategy. We also published examples of pension funds that are already successfully integrating impact into their investment decisions.
How were the Principles designed?
The Principles were designed and tested through consultation with people across the pensions industry, in partnership with Pensions for Purpose.
They offer a good governance framework which tackles the investment process at every stage in the investment chain – from how pension schemes can put in place objectives and set an implementation framework, to how to hold investment consultants and managers to account, and how to report on what is being achieved through a balanced measurement framework.
Who can use the Principles?
The Principles are for trustees, local government pension scheme (LGPS) committee members, advisers and in-house investment teams across the full spectrum of pension schemes.
They are also a useful tool for investment consultants, fiduciary managers and asset managers who play a vital role in enabling the implementation of these Principles.
How can you take action? Become an adopter
Join our Adopters Forum – a member forum of pension funds, investment consultants and fiduciary managers that have committed to the Impact Investing Principles for Pensions. The Forum is run by Pensions for Purpose in partnership with the Impact Investing Institute to advance the Principles, share best practice and encourage more pension funds to invest with a positive social and environmental impact.
Members of the forum benefit from:
- A unique peer network where members can share experiences in pursuing impact investing
- Being at the forefront of a growing area of investment opportunities
- A quarterly newsletter
- Invitations to quarterly events
- Case study and research material
- An invitation to Pensions for Purpose’s Annual Awards Event which will feature an Impact Investing Adopters Award for Pension Funds
Become a supporter or share your experience
You can become a supporter of the Principles if you are an industry body or an organisation working with pensions and support our Principles. But even if you are not ready to become a supporter, we want to hear from you. Do you have any successes or challenges around impact investing which you would like to share with us? Could your experience be a case study? Get in touch with us at firstname.lastname@example.org
Fiduciary duty is not a barrier to impact investing
To address the common myth that impact investing is at odds with pension trustees’ fiduciary duty – the legal obligation on trustees to act in the best interest of the scheme’s members, we produced a legal paper that explains how fiduciary duty and impact investing are compatible. The paper was written and attested by five leading law firms and reviewed by a number of other lawyers and experts.
We also produced a short explainer video debunking some of the most common misconceptions about impact investing with the generous sponsorship of Barnett Waddingham.