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© Copyright 2000 Rogers Media. The following article first appeared in the November 2000 edition of
BENEFITS CANADA magazine.
E-Poll
Should plan members be given an opportunity to vote for an ethical investing screen on their
pension fund?
Pension plan fiduciaries are feeling more comfortable with the concept of ethical investing thanks, in
part, to the robust economy, says Patrick Walsh, president, SEI Investments in Toronto. "It [ethical
investing] is clearly a trend. We are starting to see fiduciaries responsible for pension assets inquiring
about this. As we--as individuals and as fiduciaries--feel wealthier and pension plans are better funded we
[the industry] are starting to look at broader issues," he says.
This month's E-poll reveals that respondents are pretty much divided on the issue of whether or not plan
members should be given an opportunity to vote for an ethical investing screen on their pension fund, with
52% responding in the negative and 48% indicating that plan sponsors should indeed consider an ethical
screen.
Walsh says, today, fiduciaries are looking at their role in a broader context and recognizing that ethical
investing is relatively safe as far as ensuring members' returns are not jeopardized. "If you eliminate 60
stocks from the TSE and base your investment portfolio on 240 stocks you can still build a good portfolio,"
says Walsh.
Michael Mazzuca, a partner with Toronto-based law firm Koskie Minsky, who spoke on the topic at a recent
Canadian Pension and Benefits Institute seminar, warns, however, that there is no case law in Canada to
protect plan sponsors. "We have to look at the U.K. and U.S. cases. [The U.S. legislation] ERISA doesn't
exclude ethical or social investing but states that these practices must not impact on financial return of
the fund."
Mazzuca points out that in the U.K., legislation was passed in July that actually requires pension fund
investment policies to state to what extent social or ethical criteria are being considered, and what
impact they would have on the plan. "It indicates an acceptance [of this practice]--an expectation that
boards of trustees will take these social considerations into account."
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