UKSIF response to Government's Kay report today

Published on Wednesday, 29 February 2012 10:37
Posted by Scott Buckler

The UK Sustainable Investment and Finance Association (UKSIF) has welcomed today’s release of the interim report of the Kay Review and called for an emphasis on effective transparency and responsible procurement among its final recommendations

UKSIF has also issued a ‘call to action’ for all pension funds and plan sponsors to participate in this important debate and drive improvements in the investment chain.

Penny Shepherd MBE, UKSIF Chief Executive said:

The turbulence of the last few years has highlighted the urgent need to fix the broken investment chain and we warmly welcome this interim report. We need to change the rules of the game for the better. Measures such as encouraging leadership by corporate pension funds, implementing and monitoring responsible investment clauses in investment management agreements, improvements to financial literacy and embracing effective transparency throughout the chain are among the important areas to focus on. A number of mainstream investors would also welcome a move away from quarterly reporting to timescales that better reflect long-term value creation.

“Effective transparency and procurement are not the sexiest of topics, but they are ones that must be embraced if we want to create genuine long-term relationships between companies and investors. Hot topics in the UK today from executive bonuses to mark-to-market accounting to carbon prices all come back to the basic problem that markets tend to reward short-term behaviour. That is why this report is so important and needs to be widely discussed.”


UKSIF is the UK’s leading trade body on sustainable and responsible investment with over 260 members including pension funds and major investment managers managing over £5 trillion of assets. It was responding to today’s release of the interim report of the Kay Review an independent review by economist John Kay to investigate whether stock markets push UK-listed companies into taking a short-term approach to business.

Ms Shepherd added

“This report is another example of the UK taking a leadership role on the global issue of responsible capitalism.  We don’t need to start from scratch. A number of leading UK corporate and public sector pension funds - such as the BT Pension Scheme and the Environment Agency Pension Funds – have shown how asset owners can put in place contracts and processes that catalyse the investment chain to consider long term issues such as climate change or fair labour practices in a financially responsible manner.”

UKSIF Chair Martin Clarke added that the next few months will be critical. He said,

“This is a timely report as investment industry support for responsible investment becomes more widespread. Professor Kay and his team have injected fresh impetus into the debate and we must all rise to the challenge of ensuring that UK equity markets allocate capital most effectively for long-term wealth creation. We need all parts of the investment chain to engage with these discussions and make sure we come out with simple changes that create the space for responsible capitalism to thrive.”

 

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