The United Nations has officially enrolled in the socially responsible investment movement.
You can almost hear the cynics’ eyeballs rolling.
Klaus Töpfer, executive director of the U.N.'s Nairobi, Kenyabased Environment Programme, last month launched a campaign to urge pension funds worldwide to develop principles to ensure that they don’t invest in companies that damage the environment or exploit child labor.
Environment minister for seven years under former German chancellor Helmut Kohl, Töpfer, 66, is convinced that investors and their advisers are “beginning to appreciate the importance of retaining a long-term view” and recognize that sound environmental, social and corporate governance records don’t imperil, and may even help, companies’ investment performance.
He draws support for this contentious view from the recent UNEP Finance Initiative. Using equity research supplied by major European brokerages, including Deutsche Bank, the sweeping study, released in June, concluded that companies’ social, environmental and governance policies had a long-term, sometimes dramatic, impact on their share prices. A dozen money managers -- among them, BNP Paribas Asset Management and Morley Fund Management -- also contributed to the U.N. evaluation. The report, which contradicts academic studies suggesting that socially responsible investing results in lower returns, urged brokerages to pay greater heed to these policies in their research recommendations and encouraged companies to make more information about their policies available to analysts and investors.
Morley is one of the early backers of Töpfer’s so-called responsible investment initiative. The program was launched out of that firm’s plush London offices, which overlook a mainspring of speculative capitalism, the Royal Exchange. Morley, the U.K.'s £20 billion ($36 billion) Universities Superannuation Scheme and others are to come up with responsible-investment guidelines by the fall of 2005.
Will the U.N.'s own $20 billion Joint Staff Pension Fund back those guidelines? “We can hardly preach the benefits of water and drink wine,” says Töpfer.
