“Pension funds should use their collective power on financial markets”

In this FSinsight video, Jack Gray describes why he believes that pension funds should not refuse “to play politics“ and lobby Congress like Wall Street does. He names the Volcker Rule in the U.S. as an example where pension funds failed to assert their power. “The Volcker act which originally tried to separate retail banks from investment banks has now been watered down so far by [the Wall Street] lobbyists in Congress that Paul Volcker himself says he doesn’t understand it.” To further make his point he goes on, “The Securities and Exchange Commission went around speaking to people about the Volcker Act. By their own report, they met with 390 financial services organizations. They met with 19 pension funds organizations.”

Jack Gray has written extensively about behaviour patterns within the financial services industry, among others at the Paul Woolley Centre for the Study of Capital Market Dysfunctionality. Recently, he published the article “Misadventures of An Irresponsible Investor” about “the ESG movement”^[1] and how he sees that boards of superannuation / pension funds spend excessive time on environmental, social, and governance (ESG) factors relative to their potential to improve their members’ benefits. According to him, “ESG raises important questions about the very purpose of fiduciary investing, especially whether a pension fund has any social responsibility beyond generating the greatest risk-adjusted return for its beneficiaries.”

References

The interview was recorded during ESG Europe 2012 conference, held in Amsterdam, October 2012, organized by the Responsible Investor.

1. Gray, Jack. “Misadventures of an Irresponsible Investor.” Rotman International Journal of Pension Management 5, no. 2 (January 1, 2012): 8–20. 

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Sustainalytics plays a role in the ‘long-term-ism of investments’”, Jack Gray, www.tias.edu, November 29, 2012.

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Research Paper
Centre for the Study of Capital Market Dysfunctionality