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What Is the Issue:
The $21 billion United Nations joint staff pension fund
is currently not using socially and environmentally responsible
screens to invest its money.
What Human Rights and Environmental Principles Promoted
by the UN Are at Stake:
Global
Compact
UNEP
FI Statement by Financial Institutions on the Environment
and Sustainable Development committing to the integration
of environmental considerations into all aspects of their
operations
Other human rights and environmental treaties and conventions
such as the UDHR,
ICCPR, ICESR,
CRC, CEDAW,
the Rio
Declaration, major
ILO conventions and other key UN human rights and
environmental documents
What Needs to Be Done:
UNJSPF should:
- immediately initiate the process by which socially and
environmentally responsible guidelines will be adopted in
the most feasible future. This process involves developing
the guidelines themselves, under the guidance of basic UN
principles in areas such as human rights, the environment
and labor laws. This should be a transparent, public process
involving a broad range of internal and external stakeholders,
including UNJSPF participants themselves. The types of sectors
and/or companies excluded through screening techniques or
the guidelines for shareholder activism should be clearly
outlined as a result of this process.
- continually review and promote the resulting guidelines
throughout its publications and communications as a standard
setting tool for other funds in the private and public sectors;
- clearly highlight the internal and external auditing measures
it will take to ensure that such guidelines are routinely
respected;
- clearly outline the remedial procedures available in case
of non-compliance.
Who Can Do It:
The UNJSPF Investment Committee
UN Secretary-General Kofi Annan
UN USG For Management Catherine Bertini
UNJSPF CEO Bernard Cocheme
If You Want to Know More:
With $21.8 billion in assets as of 2002, the United Nations
pension fund system ranks as one of the largest in the world,
with total assets larger than the GNP of each of the smallest
83 countries in the world.
The United Nations Joint Staff Pension Fund, or UNJSPF,
is a fund established by the General Assembly of the United
Nations to provide retirement, death, disability and related
benefits for the staff of the United Nations and the other
organizations admitted to membership in the Fund. UNJSPF
is currently serving 80,082 participants from over 190 countries,
and paid out over $1.1 billion in 2002.
None of the documents published by UNJSPF, including its
2003 Rules and Regulations, its Annual Report, the UNJSPF
official web site and the CEO’s Annual Letter, mention any
socially and environmentally responsible guidelines used
in making investment decisions. When contacted by UN Observer.org,
the Investment Management office of UNJSPF acknowledged
that they are currently not using socially and environmentally
responsible guidelines to direct their investments.
Yet, the adoption of socially responsible investment guidelines
by large pension funds like US-based CalPERS, the California
Public Employees' Retirement System, with over $130 billion
in assets, is increasingly becoming common practice.
These guidelines generally include two broad types of strategies:
- screening, i.e. the inclusion or exclusion of corporate
securities in investment portfolios based on social and/or
environmental criteria. As explained by Calvert, one of
the oldest and largest socially responsible US mutual
funds, SRI investors using screens generally seek to own
profitable companies with respectable employee relations,
strong records of community involvement, excellent environmental
impact policies and practices, respect for human rights
around the world, and safe and useful products. Conversely,
they often avoid investments in those firms that fall
short in these areas.
- shareholder activism, i.e. the use of shareholder resolutions,
the threat and/or use of legal action and other various
techniques to promote the improvement of corporate governance
by the companies whose shares socially responsible investors
own. Whereas screening involves the rejection of companies
that do not meet certain criteria, shareholder activism
involves the inclusion of those very same companies with
the objective of changing them from within.
Many of the above principles and criteria mirror those
promoted by the United Nations. For instance, the nine Global
Compact Principles that Secretary-General Kofi Annan has
been promoting closely reflect some of the concerns listed
by socially responsible investors.
These nine Global Compact principles are:
- To support and respect the protection of internationally
proclaimed human rights
- To avoid complicity in human rights abuses
- To uphold freedom of association and the effective recognition
of the right to collective bargaining
- To eliminate all forms of forced and compulsory labor
- To abolish effectively child labor
- To eliminate discrimination with respect to employment
and occupation
- To support a precautionary approach to environmental
challenges
- To promote greater environmental responsibility, and
- To encourage the development and diffusion of environmentally
friendly technologies.
As Frederick Dubee of the Global Compact Office pointed
out, “the objectives of the Compact are consistent with
the broad goals of socially responsible investing challenging
traditional management practices by seeking to initiate
a broader concept of the role of business in society.”
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UN Observer.org recommendations:
UNJSPF should:
- immediately initiate the process
by which socially and environmentally responsible guidelines
will be adopted in the most feasible future. This process
involves developing the guidelines themselves, under the
guidance of basic UN principles in areas such as human rights,
the environment and labor laws. This should be a transparent,
public process involving a broad range of internal and external
stakeholders, including UNJSPF participants themselves.
The types of sectors and/or companies excluded through screening
techniques or the guidelines for shareholder activism should
be clearly outlined as a result of this process.
- continually review and promote
the resulting guidelines throughout its publications and
communications as a standard setting tool for other funds
in the private and public sectors;
- clearly highlight the internal
and external auditing measures it will take to ensure that
such guidelines are routinely respected;
- clearly outline the remedial
procedures available in case of non-compliance.
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