The United Nations Joint Staff Pension Fund
Issues relating to sustainable development and the global compact
Bernard Cochemé, UN
[Continuation from previous issue].
The Fund and the social and environmental
components of its internal management
Pursuit of the goals of sustainable development and compliance with
the principles of the Global Compact lead to re-examining the operating
processes and reviewing them in detail with reference to the aforesaid
goals and principles.
Two of the nine principles of the Global Compact relate to human rights;
they involve, on the one hand, a commitment to uphold and respect human
rights in the Organization’s own sphere of activity and, on the
other hand, to ensure that the Organization is not involved or complicit
in human rights abuses. In a tertiary type of activity, such as that
of the Pension Fund, these general principles can easily be applied,
for instance, in human security in the workplace and measures of protection
against accidents in the work- place. Another possible area of application
is enquiring into the working conditions of the employees of subcontracting
firms providing services under contract to the Organization.
In the area of labour rights, the Global Compact contains four basic
principles concerning freedom of expression and collective bargaining
rights, support for the elimination of forced and compulsory labour,
support for the abolition of child labour and the elimination of all
forms of job discrimination. These principles are, of course, already
incorporated into the basic goals of human resources policy, but in
the area of access to employment, only constant vigilance can ensure
that equal opportunity—for example between the sexes—is not
mere window- dressing, but a reality.
In the area of the environment, the three principles included in the
Global Compact concern support for the precautionary principle, a commitment
to promote greater environmental responsibility, and the dissemination
of environmentally friendly technologies. The internalization of these
principles opens up broad areas of work, involving buying chains as
well as the evolution from an unthinking consumer culture to a restrained
consumer culture concerned with economy and moderation, whether with
regard to electric power, water or paper. The range of possible actions
is broad, and it is facilitated by the possibility of choosing recyclable
materials (paper, computer and telephone equipment), the existence of
waste-sorting systems and the wealth of information available on these
subjects. Progress in this area is within reach; it requires a modicum
of training and a determined approach, to which the Pension Fund can
commit itself wholeheartedly for the greater good of the environment
and better control of some of its operating costs.
In its approach, the Fund can benefit from the example of similar organizations;
from this standpoint, the collection of information on best practices
can speed up the process and help to integrate the Fund into a network
of organizations with innovative practices.
The Fund and responsible investing
A responsible approach to investing is not new to the Fund, which has,
for example, in the course of its history chosen, in accordance with
the guidelines formulated by the General Assembly, to stay away from
the financial markets of countries practising apartheid.
In addition, the principles established by ILO and the Rio Conference
have naturally drawn the attention of investors, who see an opportunity
to incorporate them into risk analyses. While investment decisions are
traditionally based on technical analyses performed by financial analysts
whose models emphasize the prospects of earnings on shares, the consideration
of social and environmental factors appears to be both a useful and
a necessary complement. It makes it possible to deepen and expand the
risk analyses that are an essential component of future performance.
Indeed, no one can ignore potential legal risks (lawsuits, regulatory
penalties), financial risks (excess costs) or strike risks, or risks
to one’s image or reputation, which may have an adverse impact
on share prices, in situations where a firm’s activities cause
pollution, environmental degradation or social conflicts with its personnel.
Information on social data and environ- mental factors is now widely
available from companies themselves, more and more of which are publishing
annual reports on these two aspects of their management. This type of
information is also offered by specialized research and ratings organizations.
Furthermore, many countries have enacted laws aimed at compelling public
companies to publish social and environmental data annually. The quality,
of course, is not always entirely satisfactory, owing to the obfuscation
with which these reports continue to be hedged, or because of the imprecision
of the indicators selected, but the trend is under way and remarkable
progress has already been made.
In other words, as far as socially responsible investing is concerned,
the novelty resides less in the fact that financial managers consider
it important to integrate social and environmental factors into their
investment decisions, but rather in the more systematic nature of this
integration within the investment process.
For the Pension Fund, the tool which appears to be the best suited
to defining and highlighting approaches in this area is the Investment
Charter, which is updated periodically.
Overall, the best way for the Pension Fund to strengthen its approach
and its commitment to the goals of sustainable development and the principles
of the Global Compact is to work harder to integrate them into its operating
processes in the framework of an action plan for improvement and change
over time.
The author is Chief Executive Officer of the UNJSPF