The National Post recently published a commentary, “Profiting from green hysteria,” on a seminar organized by the Investment Funds Institute of Canada on opportunities to make money from climate change. “The problem,” writes the columnist, “is that all the investment potential derives from restrictive legislation and/or subsidies, that is, from force and favour, salted with a good dose of economic fantasy.” The article ultimately asserts, “‘Socially responsible investing’ is the playground of moralists and those who wish to make a buck from them.”
Yet there’s evidence to suggest a growing trend toward considering environmental, social and governance factors. Some say it’s the way of the future. For example, the April 2009 cover of Financial Post Magazine claims, “Think a global recession will spell the end of the environmental boom? Think again.” The article offers a number of reasons (“because corporations have already bought in,” “because recessions don’t last forever”), concluding that “green is here to stay.”
Clearly, SRI is a topic that inspires strong feelings and beliefs. But for our purposes, the real issue isn’t the corporate green trend, nor is it the moral implications of SRI for individuals. It’s whether SRI is appropriate for pension funds.
Some feel that SRI has no place in pension fund investing, since the plan’s purpose is to maximize returns for the members and ensure their future retirement income adequacy. Others believe that plan members should have a say in how and where their pension monies are invested since they are, after all, the beneficiaries.
How do you, as a plan sponsor, balance the broader implications of your investment decisions—and the desires of your plan members—with the need to keep the plan well funded and generate good returns? Is SRI a moral concern or an economic one? And when we’re talking about pension funds with millions or billions of dollars in assets, does this perceived conflict even exist?
Our special feature “Socially Responsible Investing: Is it the right thing to do?” explores some of these issues. But I’m also curious to know your thoughts—whether “going green” for pension funds should mean greater social and environmental consciousness or, simply, “show me the money.”.
Alyssa Hodder is Editor of Benefits Canada.
alyssa.hodder@rci.rogers.com
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© Copyright 2009 Rogers Publishing Ltd. This article first appeared in the August 2009 edition of BENEFITS CANADA magazine.