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Responsible Investing of Pension Assets: Links between Framing and Practices for Evaluation

Abstract

Despite the increase in the acceptance of responsible investing (RI) in general (Allianz, in www.allianzglobalinvestors.com, 2010), the global community is still witnessing unprecedented levels of practices that can only be categorized as “unsustainable”. It appears, then, that either the inroads made by the RI community have not kept up with the increase in unsustainable practices, or, that the RI process itself has been ineffective at producing meaningful change. The current study aims to investigate the practices used by pension plan sponsors to determine how they may enable, or interfere with, the adoption of implementation of RI. We adopt Framing Theory (Benford and Snow, Annual Review of Sociology 26:611–639, 2000), specifically the idea that particular frames find alignment when they resonate with their targets, by either bridging, extending, amplifying or transforming a domain. We extend research to include understudied practices by performing an analysis of 60 public pension funds in Canada. We find evidence of disconnect between the financial frame which dominates practices for compliance and evaluation, and the social frame of RI as a source of change. If the aim of RI is to produce long-term change, then a consideration of whether it aligns with extant practices is critical. We discover a variety of frame alignment tactics already employed in practice. We also find that, even within the dominant financial frame, opportunities for frame extension, amplification and transformation do exist, and examine how these are more (or less) possible depending on how the asset management structure is designed.

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Notes

  1. 1.

    Our dataset includes 31 of the TOP 100 Pension funds listed in the 2014 Benefits Canada report (Sadakova 2014). Many of the TOP 100 pension funds are for private firms and the corresponding information is not publicly available. Our 31 "TOP" funds cumulated net asset value amounts to $527.9 Billion CAD which represents 54.1 % of the total pension asset value of the TOP 100 funds. This indicates that our dataset forms a significant and representative sample of the Canadian pension investment practices.

  2. 2.

    Although both academic and practitioner studies in the literature have identified these two broadly defined streams of RI, no specific label has been identified, and indeed, the labelling of these streams has itself been deemed problematic. Since we are not examining the framing activities carried out by the proponents of RI (rather, our site of analysis is at the practice level), we have not attempted to resolve any outstanding debate concerning the frames employed.

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Acknowledgments

The authors are grateful to the editor, Gary Monroe, and two anonymous referees, for their constructive insights, which considerably improved this paper. The authors also thank participants at the 2013 EGOS Conference in Montreal (Canada), the 18th International Symposium on Ethics, Business and Society in Barcelona, (Spain) and the 13th International Conference on Corporate Governance in Dijon (France) for their valuable comments. Special thanks to Elisabetta Ipino for her invaluable support and to Martin Tzakov for research assistantship. Financial support from Fonds de recherche du Québec - Société et culture (Darlene Himick) and funding from the John Molson School of Business (Sophie Audousset-Coulier) is gratefully acknowledged.

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Correspondence to Sophie Audousset-Coulier.

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Himick, D., Audousset-Coulier, S. Responsible Investing of Pension Assets: Links between Framing and Practices for Evaluation. J Bus Ethics 136, 539–556 (2016). https://doi.org/10.1007/s10551-014-2530-z

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Keywords

  • Framing
  • Pension funds
  • Responsible investing
  • Investment monitoring