That leaves how our funds are structured.
#BIGG BOSS SEASON 9 2ND DECEMBER 2015 CODE#
A better approach might be to have a broad duty and a code of practice. I argued today that they are over prescriptive, specifying limits to specific forms of investment. Funds are also weak on shareholder engagement and they could use that leverage to promote trade union, government and council policies more effectively.Īnother barrier is the investment regulations. The risks involved in some of these unethical investments are not sufficiently well understood. It is perfectly possible to invest in infrastructure and ethical investment within this framework and pension funds across the UK are doing this better than many Scottish local government funds. " the precise choice of investment may be influenced by wider social, ethical or environmental considerations, so long as that does not risk material financial detriment to the fund." The LGA recently commissioned counsel opinion on this issue and this quote sums up the position well:
Our funds invest in tobacco, arms and fossil fuel companies. Again there is a conservative interpretation of the legal position that is holding back infrastructure investment and results in pension funds investing in wholly inappropriate and unethical investments for a public body. If there is a will, there is a simple solution - recruit the in-house expertise.Īnother barrier is the claimed impact of fiduciary duty. They understand equities and commercial property, they don't have much experience in housing or infrastructure generally. This is closely linked to a lack of expertise. Managers prefer to invest in what they understand and don't like change. The first is a small 'c' conservatism in pension funds generally. I was asked what are the barriers to greater infrastructure investment? The best investments are those that have a low risk revenue stream. I argued today that the same principle could apply to other forms of infrastructure investment including transport and energy generation. In 2013 I wrote a rep ort With assistance from the SFHA on the use of pension funds to build houses and there has been some take up of the idea in Scotland and the rest of the UK. Half of this is invested in overseas equities, investment that comes with significant and often hidden management costs that are poorly understood. The Scottish Local Government Pension Scheme has some £26bn to invest. I was giving evidence to the Scottish Parliament Local Government Committee this morning on the use of pension funds for infrastructure investment. Scottish pension funds should be used as a force for good as well as delivering high quality pensions for our members.
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