Wednesday, October 2, 2013

Linking Inequality for All with Pension Reform

Yesterday, Sharan Burrow, General Secretary of the International Trade Union Confederation, gave a speech before the United Nations Principles of Responsible Investing convening in Cape Town, South Africa.

Last night, she emailed me the text of her remarks.

The title: PUSH THE RESET BUTTON - A LINE BETWEEN SPECULATION & INVESTMENT

In it, Sharan makes the connection that Robert Reich has not yet made in his powerful documentary film, Inequality for All, about the link between pension investing, economic inclusiveness and environmental ownership for a truly sustainable prosperity in the 21st Century.

Here is an excerpt.

"The Central Role of Pension Funds

"In the discussion on [Long Term Investing] by institutional investors, it is important to distinguish between asset owners (pension funds, insurance companies, sovereign wealth funds) and asset managers (asset management firms, bank asset management branches) and to give primacy to the former over the latter. That is particular true for pension funds with liabilities that can span over 20-30 years, (i.e., the time needed to accumulate capital to finance workers right to retirement). With over USD30tr assets under management, pension funds represent an important class of asset owners.

"Importantly, pension funds have a social purpose, that of financing workers right to retirement and most often they are established as part of a collective bargaining agreement and include member-nominated representatives on their board of directors. Given their social purpose, it would  make sense for pension funds to embrace fully both a negative and positive list approach to LTI shifting away from short-term to long-term investments, mainstreaming responsible investment practices, greater portfolio exposure to infrastructure and job creation projects."

Once pensions fully embrace their stewardship responsibilities to invest with social purpose by going long term, it is a easy step to going evergreen.



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