Corporate pensions are leading the way for policy development on responsible investment (RI) globally, as the number of pensions with policies reached 46 per cent in 2019, according to Aon.

As reported in our sister publication European Pensions, Aon’s report, 2019 Global Perspectives on Responsible Investing, which surveyed 230 investment professionals globally, revealed that the number of corporate pensions with RI policies grew from 31 per cent to 46 per cent in 2019.

Geographically, institutional investors in the UK were the most likely to have an RI policy, with 55 per cent of respondents stating they already had one in place. UK respondents were also the most likely to be developing an RI policy, with 32 per cent indicating that work on this was underway.

Across all institutional investments, Continental Europe maintained the top spot in 2019 for RI. Forty-two per cent of the respondents from Continental Europe already have an RI policy, while investors in Canada and the United States followed at 38 per cent and 32 per cent, respectively.

Furthermore, the report found that as institutional investors see responsible investing grow in importance, they are also hiring staff to oversee it. While only 20 per cent of those polled in 2018 had staff dedicated to responsible investing, that figure has jumped by nine percentage points in the last year.

Increases in RI staff were made in all geographic regions, with Continental Europe and the UK seeing the largest gains. Continental Europe respondents are the most likely cohort geographically to have staff dedicated to RI, at 37 per cent, but 33 per cent of UK respondents indicated they did too.

The report also found that for some institutional investors the primary motivation for engaging in responsible investing was to impact global issues such as climate change, diversity or social justice (29 per cent). This is largely a UK and Continental Europe phenomenon, however, with only 10 per cent of US investors and 8 per cent of Canadian investors indicating global impact is a motivating factor.

In addition, despite gains in overall investor sentiment towards RI in the United States, 44 per cent of those polled indicated that RI plays no role in their investment decision making, compared with 29 per cent in Canada, 27 per cent in Continental Europe and 11 per cent in the United Kingdom. Globally, the number of respondents who do not consider RI in the manager selection process dropped from 37 per cent to 29 per cent.

Commenting, Aon global head of responsible investing and author of the report, Meredith Jones, said: “I am sure it comes as no surprise that responsible investing is growing in importance in regions like the UK and Continental Europe, where there’s been a marked increase in RI regulation.

"However, we are also seeing significant investor-led RI efforts in areas where regulation is not driving activity. It seems institutional investors are increasingly concerned about risks associated with non-financial factors within their portfolios, and RI offers multiple ways to capture, evaluate and mitigate those risks.”

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