The United Nations Joint Staff Pension Fund (“UNJSPF”) has an Environmental, Social and Governance “(ESG”) programme. The Investment Management Division (“IMD”) of the UNJSPF has a duty to act in the best interest of our participants and beneficiaries. When evaluating investment opportunities, ESG issues play an important role.
As part of an international organization committed to social progress, better living standards and human rights and as a founding signatory to the United Nations supported Principles for Responsible Investment (PRI) initiative and in association with the United Nations Global Compact (UNGC) and the UNEP Finance Initiative (UNEP FI), IMD acknowledges its responsibility to society.
Our ESG programme is focused on the following areas: We have restrictions on investments in tobacco and armaments securities, and the green investment portion of our ESG programme includes both green bonds and green equity.
Tobacco & Armaments Restrictions:
The UNJSPF has restrictions on investments in tobacco and armaments securities. Investments in companies that derive any revenue from the production of tobacco and that primarily deal with manufacturing and distribution of tobacco and tobacco related products are prohibited. Furthermore, the Fund shall not invest in securities of companies that derive any revenue from the production of military weapons, weapons systems or weapons of mass destruction, including nuclear, chemical or biological weapons, or derive more than 10 per cent of their revenue from the production of customized components for purposes of the production of military weapons, weapons systems or weapons of mass destruction.
The United Nations Joint Staff Pension Fund (UNJSPF) began the “E” or Environmental part of its ESG program in 2008 when the Fund first invested in green bonds. Green bonds facilitate investments with environmental benefits such as renewable energy, sustainable energy, sustainable waste management, biodiversity conservation and clean transportation.
The UNJSPF is a signatory of several important initiatives - the United Nations supported Principles for Responsible Investment (PRI); A Statement of Investor Expectations for the Green Bond Market; and the 2014/2015 Global Investor Statement on Climate Change.
Subsequent to the UN Climate Summit in September 2014, when the Global Investor Statement on Climate Change was signed by over 400 investors representing more than $24 trillion in assets, our $50 billion pension plan has made significant strides to address climate change.
We worked with MSCI, State Street Global Advisors and BlackRock to develop and launch two low carbon Exchange Traded Funds (ETFs), known as LOWC and CRBN. The MSCI ACWI Low Carbon Target Index was announced on 23 September 2014 during the UN Climate Summit. This new index was designed to closely track the performance of the MSCI ACWI Index, while having a lower carbon exposure.
We are pleased to see this concept become a reality, said Carol Boykin, CFA, Representative of the Secretary-General for the Investment of Assets of the UNJSPF. Together, we can work on stabilizing greenhouse gas concentration in the atmosphere and providing long-term growth opportunities for sustainable portfolios.
The Low Carbon ETFs now total close to $300 million, and they are performing in line with their benchmarks. The concept was welcomed by a bell-ringing at the New York Stock Exchange on Earth Day, and the funds just celebrated their one-year anniversary.
Most of the UNJSPF assets are internally managed, and the Fund has been actively exploring ways to measure its carbon footprint. We have tested the measurement services of three providers over the past year. The Fund’s carbon footprint has not been disclosed yet due to the need for measurement standardization. That said, we can report that the results are encouraging, as they confirm that the Fund’s carbon footprint is lighter than the carbon footprint of the benchmark – the MSCI All Country World Index.
Much hard work has produced these accomplishments. Next steps such as measurement standardization could be followed by independent auditing to track progress toward reduction of greenhouse gas emissions and to confirm accountability.
As fiduciaries, we need profitable investments in order to meet the Fund’s return objectives. We need to work together to achieve a win/win so that our investments will be both economically and environmentally sound. In this spirit, we are escalating our engagement efforts.
Our new motto is “engagement through encouragement.” The resources lie in the hands of the companies in which we invest. By encouraging business leaders to identify ways to use their resources more efficiently, we can have a meaningful impact on the sustainability of both our investments and our environment.
On Earth Day, UN Pension Fund highlights importance
of low carbon investments to tackle climate change
UN Pension Fund staff members at the New York Stock Exchange (NYSE), April 22, 2015