Public Pensions More Likely to Use SRI/ESG Strategies

October 2, 2012 (PLANSPONSOR.com) – Public pension plans are more than twice as likely to implement socially responsible investing (SRI) and environmental, social and governance (ESG) strategies than corporate plans, according to a BNY Mellon survey.

Thirty-five percent of public pensions have an SRI component, compared with only 16% of corporate plans. A BNY Mellon white paper said concerns around the Employee Retirement Income Security Act (ERISA) weigh on U.S. corporate clients, with debate about their role as a fiduciary when integrating ESG investing.

Furthermore, the survey found portfolio screening is still prevalent, but shareholder advocacy is on the rise. Overall, 24% of responding clients have implemented SRI/ESG strategies within their investment process, representing more than $200 billion in assets.

Highlights from the survey include:

• Twenty-seven percent of foundations and endowments have adopted SRI/ESG strategies.

• Eighty-percent of firms believe there is no performance trade-off between SRI/ESG strategies and traditional investments;

• More than one-third of respondents expect SRI to be more important in the future;

• Screening is the most prevalent approach in how clients implement ESG strategies;

• Main SRI focus areas continue to be in the categories of human rights, weapons and tobacco; and

• Many investors rely on their managers to monitor SRI/ESG screens they put in place.

To view the full paper, “Trends in Environmental, Social, and Governance Investing,” visit http://www.bnymellon.com/foresight/pdf/esg-investing-1012.pdf.

Kristen Heinzinger
editors@plansponsor.com