16 March 2007
The former US vice-president Al Gore has urged the British
pension fund industry to use its muscle to force companies to take
a more responsible approach to environmental issues.
Speaking at the National Association of Pension Funds' annual
investment conference in Edinburgh, Mr Gore warned that companies'
obsession with meeting short-term profits targets, rather than
taking a longer-term view, was working against the battle to
reverse climate change.
Mr Gore suggested that fund managers' pay be linked to a minimum
of three years' performance, to encourage them to take longer-term
positions in companies, rather than turning their portfolio over
every few months. He said that 30 years ago, the average period for
which a US investment fund held a stock was seven years. Today, the
average mutual fund turns over its entire portfolios in 11
months.
Mr Gore was booked for the conference in his capacity as
chairman of Generation Investment Management, a UK-based group
which is focused on developing new approaches to sustainable
investment. He said that putting an end to short-termism in the
boardroom, and encouraging better environmental practices, would
ultimately achieve better returns for pension funds in the longer
run.
Mr Gore said pension fund trustees and managers had a "fiduciary
obligation" to look much more closely at the impact of the climate
crisis on the companies in which they are investing.
