Posted: Thursday, 27 July 2006

Executive Summary

Concerns around Socially Responsible Investment (SRI) for the assets of state pensions have preoccupied decision-makers and citizens worldwide for decades. In some countries, as we review below, such concern has prompted concrete action. In Canada, the Canadian Pension Plan Investment Board (CPPIB) recently produced a Policy on Responsible Investment, and the move has spurred significant debate.

At issue is how state pensions - as some of the largest pools of capital on the planet - can influence global business to shed its focus on short-term profit at any cost. Advocates of SRI claim mandatory state pensions, as obvious pools of workers' capital, should provide a leadership role in rejecting such 'short-termism'. In contrast to prevailing financial wisdom, state pensions should help create a vibrant and sustainable world economy.

Inspired by such reasoning, critics in recent years have questioned the CPPIB's investments in the tobacco industry, weapons producers, and firms with questionable (or reprehensible) corporate practices. As critics have explored alternatives, questions have been raised about the SRI practices of state pension plans outside Canada. Many have agreed that further inquiry into this subject would help the CPPIB implement (and potentially improve) its stated Policy on Responsible Investing.

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