Socially Responsible Investment For Pension Funds

As a financial investment through which to promote the fulfilling of corporate social responsibility, socially responsible investment (SRI) is wildly used in the financial markets, especially in western countries. To promote sustainable development in today's financial markets face a variety of uncertainties. Adoption of the concept of socially responsible investing in the investment decision-making of pension funds, both from a theoretical or practical point of view, has far-reaching significance.According to the definition of U.S. Social Investment Forum, SRI is"Integrating personal values and societal concerns with investment decisions. SRI considers both the investor's financial needs and an investment's impact on society."It integrates the financing purposes with the social, environmental and ethical issues, to provide financial support to those who fulfill the corporate social responsibility. From a theoretical perspective, SRI is advanced and more effective than the traditional investment concepts. After a long time of development, SRI has begun its present stage of shape increasing both in size and performance. In European Developed countries and the United States, SRI has shown superior investment performance in general, and because of its intrinsic value with the current orientation of the social objectives of sustainable development in line, it wins more attention and favor of investors.To inspect the European and American SRI market, we find an interesting phenomenon that pension fund is becoming a major force in the field. In this paper, we focus on the adoption of SRI in the pension fund area, using the economical, financial and sociological theory as a academic tools, empirical analysis,normative analysis, case studies , comparative study, qualitative studies and quantitative studies as the main methods, analyze the effectiveness and the advantages of SRI, and thus explore the theoretical basis and practical significance for SRI. Then chose the United Kingdom and Japan as the representative to do comparative analysis of their experience, compared to its success or failure and the underlying causes, and explore China's feasible way of carrying out SRI in the pension fund investment.This paper is made up of six sections:The first chapter introduces the background and significance of the study, the author's ideas and methods, and then summarizes relevant research results at home and abroad. In this chapter the author analyzes the content of ideas and arrangements, to demonstrate the logic correlation between sections. During reviewing the existing literature, it is found that SRI and its application in pension field are concerned a lot in western countries. And there are many research results. But the domestic relevant research of the field is almost empty. This is due to the development of socially responsible investment is also concentrated mainly in Western developed countries, Asian countries, especially developing countries, are still relatively unfamiliar with the concept, but also a lack of practical application; On the other hand, there are seldom studies that to integrate our existing economic, social and cultural environment to the SRI development.The second chapter is devoted to SRI's basic concepts history and development of the status quo. Contrast the SRI definition of U.S. Social Investment Forum, Australian Ethical Investment Association, Canadian Social Investment Organization, United Kingdom Social Investment Forum, European Social Investment Forum and Asian investment in sustainable development, to demonstrate the different perspective from different countries, institutions and researchers. And then do comparative analysis of the concept of SRI and Ethical Investment and Economic target investment. And a brief review the history of SRI, the present development of international situation and future trends. Chapter III focuses on the theoretical basis of SRI for pension funds.Combination of international definition of SRI for pension funds and understanding of the author, we define it as: an investment philosophy and strategy which the trustees or managers of pension funds to take in the fund operators. Under the guidance of this idea, in the performance of fiduciary duties and investment decision-making process as far as possible, not only provide reliable and competitive financial returns to the beneficiaries of the Fund, but also highlight the social, ethical, environmental, corporate governance and other factors of concerns. By using of screening, Shareholder Advocacy, Community Development to make investment choices, impact and improve the corporate governance structure. Through which the value of beneficiaries and the social, economic, and environment can be sustainable integrated. In addition, the pension fund SRI is compared with the general SRI, and from the pension fund's own nature, to explore its necessity and feasibility of carrying out SRI.In Chapter IV, we analyze from the perspective of the practical application of pension fund SRI. First of all, we compare the matching of different types of pension funds with SRI. Pension funds are classified into public pension, private pension and pension reserve fund; DC plan and DB plan. Then study the details of the investment decision-making process of SRI for pension funds and the technical issues involved. Finally show the data to support the outstanding performance of SRI.In Chapter V, UK and Japan are chosen as representative to do comparative study. As one of the countries that firstly introduced SRI in pension fund, UK has gradually developed a more mature operation mechanism, and there are a large number of private pensions applying SRI. While in Japan the economic target investment in public pension reserve fund exposed a lot of problems. This sector sums up the experience of the two countries, in order to give a lesson for other countries.In Chapter VI, we combine the Social Security System in China and the actual socio-economic development situation with the SRI, and propose the approach by which we should follow to introduce SRI to Chinese pension fund. The author suggests that the first pilot areas of pension fund SRI should be the national social security funds and corporate pension. The government should establish the rules of SRI, and chose the appropriate policy-making organization; Require the information disclosure and monitoring mechanisms, and strengthen the awareness of social responsibility among corporate and public; establish SRI index in proper conditions.The main contribution and innovation of this dissertation:The addressing of the topic is original. Although there are seldom relevant studies in China, the author collect a great deal of materials, and put forward own point of view. Pay attention to the case study and experimental study. Select UK and Japan as representative to do comparative study, and explore the internal reasons of economics, society, and culture.It is the first time to do matching analyze of different levels and types of pension fund with SRI.Finally, the paper proposes the feasible way to introduce SRI to Chinese pension fund, which based on the present situation of society, economics and culture in China.At the time, the dissertation still contains defects, such as insufficient depth of theoretical analysis, the country comparison of the corresponding materials and there is lack of comparability due to excavation is not deep enough, policy proposals are not detailed, interoperability is not strong, failed to build a complete China's pension fund SRI system. In addition, because of the author's limited ability, there are still some inevitable errors and omissions.