Research probes responsible investment successes – and failure

A new report examines whether European pension funds – built to provide a decent retirement for working people – are also acting to protect those workers’ rights ahead of retirement. Authored by Tom Powdrill, responsible investment coordinator at the ITF (International Transport Workers' Federation), it shows that funds have made progress in the area, but have still to achieve their full potential to improve lives.

The 20 page report, Who’s responsible? Pension funds and respect for workers’ rights, can be read at, while its executive summary appears below.
Tom Powdrill explained: “The ITF applauds the widespread take up of responsible investment policies by pension funds. They’re a key form of social responsibility – and an implicit recognition that funds play a part in assisting workers both before and after retirement.
“Motivated by that we investigated how many of them were putting theory into practice and promoting workers’ rights. The results were surprising. Core labour standards are being upheld by two thirds of the 100 largest funds in Europe – but one third, many of them based in the key fund arena of the United Kingdom, are sitting on their hands.”
He concluded: “Another key finding was the power and prevalence of the ‘capital strike’: where funds respond to concerns about companies’ treatment of workers.  We identified funds in this sample alone, representing the huge sum of EUR 2 trillion, who refuse to invest in Wal-Mart, while six funds, representing EUR 287 billion, won’t touch Rynanair.”
ITF president Paddy Crumlin commented: “Pension money is not gifted. It’s the hard earned product of hard work and industrial negotiation and is a deferment of wages that workers decide to make to secure a dignified and decent retirement. It has out to be put to work itself in a way that respects that source. It is only right that it helps build sustainable individual and collective futures, and that it does so ethically. It is morally inconceivable that it should be invested in companies that attack the rights of the very workers paying towards these pensions. This new research has identified much good practice, but it has also revealed a gap that the pension fund industry must move to close.”
Executive summary: Who’s responsible? Pension funds and respect for workers’ rights
Built up over decades, European pension funds represent an enormous pool of capital intended to provide a decent retirement for working people across the continent. The International Transport Workers’ Federation (ITF) believes that pension funds should support us while we are at work, as well as in our retirement, by adopting responsible investment (RI) policies that protect and promote workers’ rights.
To find out if our pension funds do back workers’ rights, we looked at the RI policies of 100 of the largest funds in Europe. We found that practice is good in places, but there are some obvious gaps.
Most pension fund policies in many countries – such as the Netherlands, Sweden and Denmark – do refer to international standards that include labour rights such as ILO (International Labour Organization) core conventions and the UN Global Compact. These funds represent EUR 2.68 trillion in assets, or 63 percent of the total.
However, almost a third of funds, representing nearly EUR 900 billion, make no reference to international standards. The UK is the clear outsider, accounting for two thirds of the funds in this group by number, and four fifths by assets (EUR 684 billion). This is particularly worrying given that the UK has the largest pool of retirement assets in Europe, and the second largest in the OECD.
Where pension funds take active steps to avoid companies that have been accused of not respecting workers’ rights the result can be a major ‘capital strike’. Almost a quarter of the funds in the sample, representing just over EUR 2 trillion, refuse to invest in Wal-Mart. Six funds, representing EUR 287 billion, have Ryanair on their exclusions list.
The ITF’s reports shows that many pension funds do have policy in place, therefore for these funds a focus on implementation is key, and unions should share information with them about problem companies. In countries like the UK, where pension funds do not typically refer to labour issues at all, a more immediate issue is introducing policies that support workers’ rights. The ITF will work with our colleagues in the labour movement on both of these challenges.
Report author Tom Powdrill is available for interview. Please email to arrange.

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