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Workers’ Capital News - January 2013

In this issue:

  • Governance and Disclosure - focus on climate change and sustainability

    Asset Owners Disclosure Project ranks funds on climate risk management/ Unchecked potential of resource constraints to devastate pension funds/ MetallRente’s sustainable approach shaped by fiduciary duty for workers’ capital/ CalPERS’ Sustainable Investment Research Initiative to inform investment beliefs

Governance and Disclosure - focus on climate change and sustainability

Asset Owners Disclosure Project ranks funds on climate risk management

The first Global Climate Index Report from the Asset Owners Disclosure Project (AODP) identifies that many major institutional investors are far behind on addressing the risks of climate change, as reported in a recent Top 1000 Funds article.

Asset owners from 63 countries were rated based to five categories of analysis including transparency, low carbon investment, active ownership, risk management and investor chain alignment. The Global Climate Index also reveals that the size of a fund does not necessarily determine its capacity and willingness to address climate risks.

Sharan Burrow, ITUC General Secretary and AODP board member, said “We applaud the efforts of the leaders but even many of those provide scant information to us as stakeholders to allow us to see how they are managing our future. As for the laggards…these funds need to wake up to the scale of climate risk but also members need to start applying pressure to drive the change.”

The unchecked potential of resource constraints to devastate pension funds

The Guardian and IPE report on a new study, commissioned by the Institute and Faculty of Actuaries in the UK, which indicates that the impacts of resource constraints have not been suitably factored into current financial models. The study, Resource constraints: sharing a finite world, determines that “the impact of resource constraints on a long term savings vehicle such as a pension fund would be profound.” The modelled outcomes of a business-as-usual scenario show the potential for the assets of pension funds to be effectively wiped out unless governments and economic agents act in a constructive manner to manage risks associated with resource constraints.

MetallRente’s sustainable approach shaped by fiduciary duty for workers’ capital

The sustainable approach of German pension provider MetallRente has come into increasing focus in recent years, as reported by Top 1000 Funds. (Note correction to article: MetallRente in fact counts 23,000 companies as customers.) MetallRente was founded by the two social partners Gesamtmetall and IG Metall to provide companies and employees with the best possible coverage solutions for the financial security in old age and vocational disability. These unions have been influential in obliging the fund to incorporate a responsible investment approach, to ensure that gains from workers’ capital are in the interest of society as a whole.   

"The foundersof the industrial pension scheme MetallRente envisaged that MetallRente would not only act as a partner to every individual customer but also make a name for itself as a social partner,” said Heribert Karch, Managing Director of MetallRente, “The fundamental idea of a capital investment linked to environmental sustainability, social responsibility and ethical issues was therefore laid down in writing at the time when the scheme was created. It was also a sensible step to bring our fund products into this sustainable investment strategy in order to reduce the dangers that emanate from today’s extreme risks."

CalPERS’ Sustainable Investment Research Initiative to inform investment beliefs

As reported in Top 1000 Funds, CalPERS has launched the Sustainable Investment Research Initiative (SIRI) to advance the understanding of ESG factors on long term value creation and financial performance. In 2011, CalPERS prioritized the integration of ESG issues across their portfolio. “This initiative will aid us in our application, and help us draw conclusions that can inform our investment strategy and beliefs,” said Anne Simpson, CalPERS Senior Portfolio Manager and Director of Global Governance. For more on SIRI, click here. For information on the associated call for working papers on the impact of sustainability factors on investments (in partnership UC Davis and Columbia Law), click here.

Disclaimer: The CWC News Digest is a compilation of news items covered in industry publications. The content does not necessarily reflect the views of the Committee on Workers Capital or its members. Comments and reflections on news items may be sent to acard@share.ca.

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