Spain: Pension funds veto irresponsible enterprises

Socially responsible investment is no novelty, but only in recent years has it begun to take on considerable dimensions. There are, however, enormous variations from country to country. In Norway, for example, public pension funds can not only exclude enterprises accused of violating human rights or damaging the environment from their client portfolios, but also publicly announce their decision.

According to the UK's Social Investment Forum, there is an increasing number of institutional investors and pension funds that take responsible investments seriously, particularly in matters related to the environment, social and labour affairs, and business governance.

But things are different in Spain, where socially responsible investment has still not made a real step forward. Only 0,49% of the resources that funds avail of are channelled according to socially responsible criteria, whilst in the United Kingdom the percentage is 33%. According to a study carried out by ESADE, a well known Catalan business school, social awareness is clearly on the increase but it is not reflected in greater money flows towards socially responsible funds.

There are only 30 registered socially responsible funds and only two pension funds that take social criteria into consideration. According to an expert, one of the reasons for such a low level of development lies in the confusion surrounding the ?socially responsible label? which encompasses products such as ethical funds, environmental-friendly funds, solidarity-based funds and sustainable funds

There is hope within the sector that the reform that the Spanish Government is carrying out regarding the Social Security Reserve Fund will help to promote change. The bill foresees that enterprises who invest their resources wisely will be selected on the basis of principles of social, economic and environmental responsibility, which will be detailed in the implementing regulation.

More information on: www.esade.es