Pension funds could be part of the solution

Here's an interesting initiative led by the TUC, but with the backing of some key Labour MPs and other progessive types.

Government urged to press pension funds to become responsible investors
The TUC, MPs and leading figures from the pensions and investment industry are today (Monday) urging the Government, institutional investors and fund managers to back a series of proposals on responsible investment to help address the practices that contributed to the current financial crisis.

The joint statement says that 'recent events have shown how the failure to hold corporate leaders to account for their decisions about risk can have a catastrophic effect on the financial system, the economy, the corporations themselves and ultimately the well-being of members of pension schemes.'

Signatories include Treasury Select Committee Chair John McFall MP, Work and Pensions Select Committee Chair Terry Rooney MP, founder of Hermes Stewardship Services David Pitt-Watson and TUC General Secretary Brendan Barber.

The statement calls for pension funds to insert a 'do no harm' clause into their statement of investment principles. This would require fund managers and advisors to satisfy pension fund trustees that their investment decisions are not causing systemic harm to the financial system.

The statement also calls on institutional investors to sign up to the United Nations- backed Principles of Responsible Investment (PRI). The principles set out commitments for investors on engagement around corporate governance, environmental and social performance.

The group have written to the Prime Minister urging the Government to back the proposals in the statement and, if progress is not made, to consider making the 'do no harm' clause a statutory responsibility for pension funds.

The full statement is here (PDF).