Defeating Short-Termism: Why Pension Funds Must Lead

Waitzer, Edward J.

doi:10.2139/ssrn.1493307

Cited by 6 publications

(3 citation statements)

References 5 publications

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“…226 The opportunity for pension trustees (and other institutional investors) to have an effect when acting collectively, both amongst themselves and with asset providers, is great, as is the opportunity cost of defaulting (or feigning collective action with no resolve to execute on the "talk"). 227 This reflects the dominant (and still-growing) level of institutional ownership as well as the challenges of retirement income provision. The scale of such investment pools and the demands on them will certainly attract increasing expectations and scrutiny.…”

Section: Conclusion: the Pressing Duty To Collaboratementioning

confidence: 99%

The Public Fiduciary: Emerging Themes in Canadian Fiduciary Law for Pension Trustees

Waitzer

Sarro

2013

SSRN Journal

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Section: Conclusion: the Pressing Duty To Collaboratementioning

confidence: 99%

The Public Fiduciary: Emerging Themes in Canadian Fiduciary Law for Pension Trustees

Waitzer

Sarro

2013

SSRN Journal

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“…Most notably, it underlines the danger of becoming beholden to herd culture in which prudence is judged by reference to convention (that is, what other investors do) (Woods, 2011). The crisis also reveals that a constant focus on short-term performance may distract attention from large, latent longer-term risks and hazards, to pension funds' detriment (Waitzer, 2009). Time will tell how far reaching the consequences of the financial crisis will be for pension funds.…”

Section: Introductionmentioning

confidence: 99%

Putting Sustainable Investing into Practice: A Governance Framework for Pension Funds

Woods

Urwin

2010

J Bus Ethics

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“…The crisis brought to the fore the dangers of short-termism (Barton & Wiseman, 2014;Hebb et al, 2015;Kay, 2012), which refers to a disproportionate focus on short-term results at the expense of long-term interests (Chartered Financial Analyst Institute, 2020). The crisis revealed that an excessive focus on short-term performance may distract attention from large, underlying longer-term risks and threats, to the detriment of the investor (Waitzer, 2009). Since the crisis, demand has increased from both consumers and investors for greater transparency, accountability, responsibility, and democracy from the markets (Banerjee, 2010;Sievänen et al, 2013).…”

Section: Clients Demandmentioning

confidence: 99%

Challenges for Responsible Investment in the retirement benefits sector of Kenya

Mathenge¹

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Responsible investment (RI) is the investment strategy that incorporates environmental, social and governance (ESG) factors into the investment decision-making process (Hebb, Hawley, Hoepner, Neher, & Wood, 2015). RI has shifted from what was considered a niche market to become one of the fastest-growing areas of finance in many parts of the world (PRI, 2019b). However, a closer look at the development of RI and adoption rates in countries and regions reveals that RI is not commonly practised in sub-Sahara Africa (except for South Africa). This study explores the critical challenges for RI development in the retirement benefits sector of Kenya and, by engaging with a variety of key stakeholders, proposes how to overcome the identified challenges. It contributes to the literature on challenges for RI in a developing country by offering an in-depth case study of the retirement benefits sector. My study employs qualitative methods to collect and analyse data collected from semi-structured interviews with 22 participants (asset managers, regulators and capital market experts, and a council member of the Association of Retirement Benefits Schemes of Kenya) as well as a collection of published documents by government agencies in Kenya. Also, I analysed 10 annual reports to assess the kind of ESG information that is disclosed by listed companies. My study explores, in particular, how actors in the retirement benefits sector conceptualise RI. It identifies the leading ESG factors in Kenya and draws on the business-case approach to RI to explore whether the participants consider those factors as material risk factors that present both risks and opportunities to the investment decision-making process. Further, my study identifies the specific barriers for RI development and proposes how to overcome them. The findings show that participants define RI using several terminologies. This is consistent with the existing literature. My study finds that all participants consider corporate governance as a material risk factor that can impact the financial returns of a portfolio. However, most of the asset managers do not think that the environmental and social factors can present material risk factors to their investment decision-making process. Although over a third of the asset managers recognise that the environmental and social issues in Kenya present business opportunities to retirement benefits schemes, there is a shortage of well-structured assets in those areas. Further, this study identifies five specific barriers for RI development: diversification challenges; a lack of ESG data; a lack of demand/incentives; short-termism; and the demand for high financial returns and a lack of awareness and expert knowledge of RI practices. My study recommends that the National Treasury of Kenya develops RI policy for the entire finance sector. In addition, the findings support a recommendation for the Capital Markets Authority and the Retirement Benefits Authority to embark on capacity building programmes to educate the actors in the finance sector on RI strategies and to create awareness of the impact of ESG on financial returns in the long run.

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Defeating Short-Termism: Why Pension Funds Must Lead

Cited by 6 publications

References 5 publications

The Public Fiduciary: Emerging Themes in Canadian Fiduciary Law for Pension Trustees

The Public Fiduciary: Emerging Themes in Canadian Fiduciary Law for Pension Trustees

Putting Sustainable Investing into Practice: A Governance Framework for Pension Funds

Challenges for Responsible Investment in the retirement benefits sector of Kenya

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