Prince Charles urges ‘ethical investment’ of pension funds

Prince of Wales tells investors that they have a duty to invest wisely to avert a “miserable future” for their grandchildren

By Sophie Yeo

Prince Charles has encouraged pension fund industry to plan for the long term with their investments, taking into account the “gathering storm” of climate change, over consumption and financial indebtedness.

Speaking to the National Association of Pension Funds, the heir to the British throne said that the investors have a need, and arguably a duty, to ensure that emerging environmental, social and economic risks are identified and managed.

He said: “With an ageing population, and pension fund liabilities that are therefore stretching out for many decades, surely the current focus on ‘quarterly capitalism’ is becoming increasingly unfit for purpose?”

He added that a focus on sustainability eventually yielded up better long term returns, citing studies from Harvard and London Business Schools – “So you can have your cake and eat it!”

“I know that old habits die hard and that it is difficult to make the first move, but is there not a case for ensuring your portfolios are resilient in the long-term?” he said.

“Could you do so by incorporating sustainability into your mainstream strategy, rather than having it sit in a subordinate silo?

“Moreover, by contributing to the long term sustainability of Nature’s economy (in other words the maintenance of vital ecosystem services, on which the durability of our own economy ultimately depends), pension funds can help to preserve the real value of beneficiaries’ retirement income.

“Ladies and Gentlemen, your sector plays a very significant role indeed in how our economic system works, both now and in the future.  So it really does fall to you, I am afraid, to help shape a system designed for the twenty-first and not the nineteenth century.

“Which is why I can only urge you to deploy your considerable human ingenuity to make that innovative and imaginative leap that the world so badly needs – otherwise your grandchildren and mine, for that matter will be consigned to an exceptionally miserable future.”

Prince Charles has previously made similar comments on the need to adopt a more sustainable attitude to finance, and has set up an Accounting for Sustainability project to further the aim of creating a more sustainable and resilient economy.

Seb Beloe, head of sustainability research at WHEB Asset Management, told RTCC: “While Prince Charles is obviously not a regular commentator on the issues to do with investment and pension funds, his position brings this question much more visibly forward to the pension funds and indeed the mainstream financial press, so I think it’s a very helpful intervention.

“It raises the question for people, because for the vast majority of the general public as retail investors or beneficiaries of pension funds, it’s just not a question that has ever even occurred to them.

“This is a transition, and I think people will get there, and I think the fact that the Prince of Wales is making these connections is another step towards that objective.”

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