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Fund managers Gored for short-term focus

Former US vice-president Al Gore has hit out at company bosses and fund managers for damaging the environment by focusing on short-term goals.

Speaking at the National Association of Pensions Funds’ annual investment conference in Edinburgh, Gore warned that companies’ obsession with meeting short-term profit targets rather than taking a longer term view, was hampering work to combat climate change.

He urged the pension fund industry to force companies to take a more responsible approach to environmental issues. He said pension fund trustees and managers had a fiduciary obligation to look more closely at the impact that the companies in which they are investing have on the environment.

He also suggested that fund managers’ pay should be linked to a minimum of three years performance to encourage them to take longer-term positions in companies rather than switching their portfolios every few months.

Speaking as chairman of Generation Investment Management, a UK-based group focusing on developing new approaches to sustainable investment, Gore said encouraging better environmental practices would achieve better returns in the long run.

Gore, who released the environmental documentary film An Inconvenient Truth last year argued that regulation will eventually penalise firms which do not manage their carbon footprint.

Referring to pension fund trustees and managers, he said: “I am urging you to look at ways to integrate sustainability systematically into your analysis of what is a good investment. We have everything we need to make this transition possible with the possible exception of the will to act. But this will to act is a renewable resource.”

BestInvest head of communications Justin Modray says: “Most companies do take too much of a short-term approach by, for example, outsourcing to firms in emerging markets which place less emphasis on environmental issues.

“But it is a double-edged sword as consumers want cheap products. Fund managers could play a part in this by encouraging companies they invest in to be greener.”


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