Sustainable Investment: Best practice disclosure checklist for pension funds

There are compelling reasons for asset owners – in particular large pension funds and sovereign wealth funds – to adopt sustainable investment, and for governments to support them in these endeavors. First, asset owners have a key role to play in providing the capital that supports national economic and development goals. Second, sustainability issues – for example, climate change, labour rights, public health – are important drivers of investment value. Third, asset owners play a key role in building the conditions for the widespread adoption of sustainable investment.

Better disclosure (or transparency) by asset owners is an important mechanism for driving sustainability in investment markets and in the wider economy. Yet, while the general case for asset owner disclosure is clear, it is not clear what disclosures asset owners should provide or what information would be most useful to their stakeholders (which include governments, asset managers, companies and civil society).

This checklist has been developed to provide a comprehensive list of the disclosures that asset owners’ stakeholders are likely to be interested in. It has been tested on some of the world’s largest pension funds. This analysis has provided some interesting insights into how these funds – many of whom are regarded as leaders on sustainable investment – are currently reporting on their approach to sustainable investment. It has also helps to identify a series of best practice examples that might be of interest to other pension funds as they proceed on their reporting journey. These insights and examples, which are relevant to both developed and emerging market pension funds, are presented in this report.