Pension Funds-All talk and little to no action

The PRI has been in existence for nearly 3 years.What has been achieved, fundamentally. Extremely little. Constant chatter, letters sent to Obama, more declarations of better governance, blah, blah.

If you take the one fundamental issue of the PRI:
We will be active owners and incorporate ESG issues into our ownership policies and practices.

This has been a total failure. Recently, the Dutch minister of finance was chastising the institutional investors for not being active owners, with respect to the financial sector. He claimed that the asset owners were partly to blame for the financial disaster. ¬†They owned a great deal of financial stocks, but weren’t vocal or critical while the financial sector created the gasoline fire. It burned really bright but it went out very fast, and created a toxic mess.

Case in point.

APG was a major shareholder of Fortis, after being asked to buy shares to show a sign of confidence. After the price dropped nearly 95% in a few months, and the Dutch government stripped the assets and left the junk on the stock market. What was the response of APG at the shareholder meeting in Brussels, about selling to BNP. They don’t vote for. They didn’t vote against. They abstained. Not really the signs of an active shareholder.

Most of the asset owners say they are committed to integrating ESG in their whole portfolio or in a significant part. After many years of chit chat, they are proud if they reach 2 or 5%, or they claim the whole fund is ESG because they are chatting to management, or have eliminated cluster bombs. That is pathetic and ridiculous.

Most of the asset owners have signed the PRI as a sign of membership to the fitness club os ESG investment. The only problem is they forget to exercise and get on the scale to see how much weight they have lost.
As long as Asset Owners use PRI as aspirational and not a clear commitment in the short term, very little will fundamentally change. I can live with that, but at least we need to be honest. At present, the PRI and its asset owners who have signed have created a massive bulls eye on their backs, just waiting for civil society to pounce.

As Yoda said in Star Wars:

Do or do not.
There is no try.

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