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RI Implementation Guide

RI Implementation Guide

Are you a pension fund trustee or pension fund manager? If so, here are some practical steps you can take to implementing Responsible Investment in your pension fund.

Seven Steps to Implementing Responsible Investment

  1. Ensure that your Statement of Investment Principles (SIP) includes a commitment to consideration of Environmental, Social and Governance (ESG) risks and opportunities, and states whether you address ‘social, environmental and ethical considerations’.
  2. Create a detailed RI policy which demonstrates your commitment to the consideration of ESG risks and opportunities, as expressed in the SIP. The RI Policy will need to be reviewed by the board of trustees on a regular basis.
  3. Integrate ESG policy into the fund manager selection process. This means assessing the fund manager’s ability to comply with the pension fund’s ESG policy requirements, and ensuring they are referenced in your Investment Management Agreements (IMAs) or job descriptions for internal fund managers.
  4. Ensure that your ESG policy is applied to non-equity asset classes.
  5. Ensure responsibility for RI Policy is held at senior level within your pension fund and that adequate resources are in place internally or with your fund managers to ensure effective implementation of your RI Policy. Consider the use of external voting and engagement services if you are unable to dedicate your own resources to this.
  6. Sign up to the UN Principles for Responsible Investment (UNPRI), and scrutinise external fund managers who have not signed up to the UNPRI, asking them why they haven’t.
  7. Assess the effectiveness of your RI Policy and action taken on your behalf by fund managers through a monitoring process.

 

Integral to RI implementation is your pension fund’s transparency on policies, investments, and engagement results; this is most effectively ensured via a public website. It is best practice to have the following information on your website:

  • Statement of Investment Principles (SIP).
  • A detailed RI Policy.
  • Your top 100 Equity holdings.
  • Information regarding measures taken to ensure that your RI policy is being implemented, and how you are monitoring this.
  • Your full voting record at investee companies’ AGMs.
  • Information on engagement initiatives conducted by you or on your behalf.
  • Your Annual Report, with a detailed section on RI.