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Socially responsible investment, decent work, and pension funds by markus ruck, ilo

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Presentation by Markus Ruck, International Labour Organisation; at the "CSO Panel 3: Pension Towards Socially Responsible Investments"; organized by the Public Services International and other Global …

Presentation by Markus Ruck, International Labour Organisation; at the "CSO Panel 3: Pension Towards Socially Responsible Investments"; organized by the Public Services International and other Global Union Federations on 3 May 2013 during the 46th Annual Meeting of the Asian Development Bank in Delhi, India.

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  • 1. Panel Discussion: Pension Towards SociallyPanel Discussion: Pension Towards SociallyResponsible InvestmentResponsible InvestmentSocially responsible investment,decent work and pension fundsNew Delhi, 3 May 2013Markus RuckSenior Social Security SpecialistILO/DWT-New Delhi"The views expressed in this paper/presentation are the views of the author(s) anddo not necessarily reflect the views or policies of the Asian Development Bank(ADB), or its Board of Directors, or the governments they represent. ADB does notguarantee the source, originality, accuracy, completeness or reliability of anystatement, information, data, finding, interpretation, advice, opinion, or viewpresented, nor does it make any representation concerning the same."
  • 2. What is Socially Responsible Investment?What is Socially Responsible Investment?1. An investment process that seeks to achieve socialand environmental goals alongside financialobjectives (Mercer, 2007).2. Environmental, social, and corporate governance(ESG) issues can affect the performance of investmentportfolios (to varying degrees across companies,sectors, regions, asset classes and through time(UNPRI).
  • 3. The rationale of SRIThe rationale of SRI1. The concern over the ability of public policy to address issues suchas environmental degradation and human rights abuses, especiallyin developing countries, coupled with an acknowledgment thatbusiness has the responsibility and financial resources to addressthese issues.2. Empirical research showing that investors can increase theirportfolio rate of returns by considering ESG issues.3. The perception in some countries that fiduciary responsibility mayand should include wider concerns than financial returns.4. Public opinion favouring SRI, largely as a result of intense advocacyby lobbying groups. (OECD, 2007)
  • 4. Five motivations for SRIFive motivations for SRI1. Ethical reasons2. Fiduciary duty3. Financial performance and risk management4. Public attentions5. Universal ownership
  • 5. Investment strategies –Investment strategies –Negative screeningNegative screening1. Common negative screening themes used by institutional investors• Armaments and nuclear weapons• Alcohol manufacture and promotion• Manufacture and promotion of hazardous substances, such as pesticides, chlorine-containing chemicals• Environmentally damaging practices• Poor employment practices• Animal exploitation (for industry, factory farming)• Activities, process or products that have a major impact on climate change(automobile, oil and gas industry, road building, etc.)• Manufacture and promotion of ozone-depleting substances• Nuclear energy• Gambling• Animal testing (pharmaceutical and cosmetic industry)• Genetic engineering• Tobacco manufacture and promotion• Oppressive regimes• Pornography
  • 6. Norm-based screening –Norm-based screening –ILO Core ConventionsILO Core ConventionsEight fundamental ILO conventions that deal with 4 major issues:freedom of association, non-discrimination, prohibition of childlabour and forced labour1) The Freedom of Association and Protection of the Right to OrganiseConvention, 1948 (No 87);2) The Right to Organise and Collective Bargaining Convention, 1949 (No98);3) The Forced Labour Convention, 1930 (No 29);4) The Abolition of Forced Labour Convention, 1957 (No 105);5) The Minimum Age Convention, 1973 (No 138);6) The Worst Forms of Child Labour Convention, 1999 (No 182);7) The Equal Remuneration Convention, 1951 (No 100);8) The Discrimination (Employment and Occupation) Convention, 1958(No. 111).
  • 7. ILO Decent Work Agenda -ILO Decent Work Agenda -Four Strategic ObjectivesFour Strategic Objectives1. Promote and realize standards andfundamental principles and rights at work;2. Create greater opportunities for women andmen to decent employment and income;3. Enhance the coverage and effectiveness ofsocial protection for all;4. Strengthen tripartism and social dialogue.
  • 8. The ILO Declaration on Social JusticeThe ILO Declaration on Social Justicefor a Fair Globalizationfor a Fair Globalization1. The principle of universality of the ILOobjectives2. The recognition of the indivisibility ofthese objectives – they are “inseparable,interrelated and mutually supportive”
  • 9. ConclusionsConclusions1. The question about the future of Socially ResponsibleInvestment amongst pension funds still remains.2. The most important reason for SRI still seems to bereputation.3. Negative screening is still strongly represented among thevarious screening strategies. ILO Core Conventions and theDecent Work Agenda can play an important role as a basis fornorms-based screening.4. SRI will become a major trend among pension fundinvestment strategies.5. A further examination of the way in which this trend evolveswould contribute to the identification of good practices andto the creation of more efficient methodologies.
  • 10. ConclusionsConclusions1. The question about the future of Socially ResponsibleInvestment amongst pension funds still remains.2. The most important reason for SRI still seems to bereputation.3. Negative screening is still strongly represented among thevarious screening strategies. ILO Core Conventions and theDecent Work Agenda can play an important role as a basis fornorms-based screening.4. SRI will become a major trend among pension fundinvestment strategies.5. A further examination of the way in which this trend evolveswould contribute to the identification of good practices andto the creation of more efficient methodologies.

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