EFRP stimulates and facilitates discussion on best practices to integrate environmental, social and corporate governance (ESG) issues into investment policy and it encourages pension funds to consider responsible investment policies.

More and more pension funds incorporate ESG considerations into the investment decision-making process. This is based on the belief that using ESG information will enhance long-term investment returns. But plan members, too, increasingly expect assets to be managed in a responsible and sustainable manner.

Responsible investing does not necessarily imply the exclusion of particular companies from the investment portfolio. It often means a policy of engagement, by which pension funds encourage companies’ management to improve practices on ESG issues. Pension funds may also actively identify investments that contribute to, say, solving climate change.   

Pension funds are major investors in global stock markets. The very long-term attachments to companies entail a fiduciary responsibility to behave as active owners. This may involve developing an active ownership policy, exercising voting rights, filing shareholder resolutions and monitoring adherence to standards and codes of conduct.