HL Deb 30 July 1999 vol 604 cc236-8WA
Baroness Jeger

asked Her Majesty's Government:

What legal compulsion there is on trustees of pension funds to invest solely in order to achieve the highest income irrespective of the moral or ethical considerations of the beneficiaries of the funds. [HL3650]

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham)

It is not for the Government to give a definitive statement of the law in this area: that is the role of the courts.

The Goode Committee, in its Report on Pension Law Reform, considered the question of how far trustees might lawfully have regard to ethical and social considerations in deciding on investments. Their view was that trustees were entitled to avoid certain kinds of prudent investment that they considered scheme members would regard as objectionable, so long as they made equally advantageous investments elsewhere, and that they were entitled to put funds into investments which they believed the members would regard as desirable, providing these were proper investments on other grounds. However, trustees were not entitled to subordinate the interests of the beneficiaries to ethical or social demands and thereby deprive the beneficiaries of investment income or opportunities they would otherwise have enjoyed.

We believe that it is right that pension fund trustees should consider how far such issues should affect the way they invest the assets of their schemes. From 3 July 2000, trustees will be required to state their policy, if any, on Socially Responsible Investment in their Statements of Investment Principles.