Introduction
Catherine Howarth has been chief executive of FairPensions since July 2008. Established in 2005, FairPensions is the United Kingdom’s only charity that is devoted to campaigning for responsible investment in the pensions industry. It aims to mobilize the financial power of pension investments to improve corporate behavior. Howarth was previously employed at London Citizens. During seven years there she developed a high-profile campaign for a London living wage, successfully influencing a broad cross-section of stakeholders, including companies, investors, public bodies, and politicians. Previously she was senior researcher at the New Policy Institute, London. Howarth has a first-class BA in modern history from Oxford University and an MSc in industrial relations from the London School of Economics. She is a member-nominated trustee at the Pensions Trust and a member of the Pensions Trust’s investment committee.
Can you tell me why FairPensions was started, how it was started, and what its goals are?
FairPensions owes its origins to the pioneering campaign by students and university staff to influence the investment strategy of the Universities Superannuation Scheme (USS) in the 1990s. Campaigners pressed the fund’s trustees to invest more ethically and responsibly. The USS didn’t go as far as introducing ethically based screening, but it did adopt a robust, responsible investment strategy that committed it to active engagement with companies in its portfolio around environmental, social, and governance risks. That success helped to raise awareness of responsible investment across the pensions industry and encouraged a group of civil society leaders from trade unions, NGOs, etc., to establish FairPensions in 2005. The focus remains on ensuring that major pension providers use their financial clout to encourage more responsible corporate behavior. Another goal is to ensure that pension funds and institutional investors are better attuned to the views, interests, and beliefs of their ultimate beneficiaries.
On the subject of climate change, can you outline the resolutions that FairPensions introduced at the 2010 annual general meetings of Shell and BP?
The resolutions were, effectively, a request to the companies to report to shareholders about the environmental, social, and financial risks associated with their operations in the Canadian tar sands. These controversial projects are hugely environmentally destructive, not least in being one of the most carbon-intensive forms of oil production. Our point was—setting aside concerns about local environmental destruction—that the level of carbon which is built into these long-term investments could put these projects at serious financial risk.
What level of support did you get from pension funds?
The resolutions were supported by some of the largest pension funds in the world, including the likes of CalPERS, CalSTRS, and the New York State Common Retirement Fund. In the case of BP, more than one in seven investors rejected the management’s recommendation to vote against the resolution. At Shell, more than 10% of investors refused to side with management’s recommendation. Sadly, support from institutional investors in the United Kingdom was weak. The best we got were abstentions from F&C and Aviva. Everyone else supported the oil companies’ managements’ views that they were handling the risks well. Five days after the BP vote the explosion in the Gulf of Mexico suggested that BP management, at least, was not fully on top of the types of risk that we flagged up with our resolution.
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