The Office of Investment Management (OIM) at the United Nations Joint Staff Pension Fund believes portfolios that integrate material ESG metrics into their investment decision-making process, supported by active engagement, have the potential to provide returns that are superior to those of conventional portfolios while exhibiting lower risk over the long term. This view is supported by several published academic studies and our own research.

Journey on the path of sustainable investing

The United Nations Joint Staff Pension Fund is a defined-benefit fund established by the General Assembly of the United Nations in 1948, entrusted to provide retirement and related benefits to more than 205,000 staff and retirees of the United Nations and 23 other member organisations. The Office of Investment Management manages a US$63 billion multi-asset class, global investment portfolio, 85 per cent of which is actively managed in-house. The fund invests globally in more than 100 countries and 27 currencies, and in multiple asset classes: global equities, global fixed income, private equity, real estate, infrastructure, timber, and commodities.

OIM began the journey towards sustainable investing decades ago by restricting investments in tobacco and armaments, reflecting the values of the United Nations. The office became a signatory to the Principles for Responsible Investment (PRI) in 2006. This was followed in 2008 by investing in the first green bonds, issued by the World Bank, and being the catalyst investor in low carbon exchange-traded funds in 2014.

In recent years, OIM has been transitioning from a program of ESG-related activities to integrating ESG considerations across all asset classes.

OIM began introducing ESG metrics into the investment process by giving portfolio managers a broader set of tools to consider in their decisions. For internal actively managed public equity portfolios, we are piloting a four-stage process, tailored around PRI’s recommendations. In 2018, OIM implemented a new custom global equity index that can serve as a benchmark for other global equity investors. This index takes into account investment restrictions on companies that exceed a defined threshold of revenue generated from tobacco or weapons. Within fixed income, we have been increasing our portfolio of green bonds in line with net outstanding issuance in this market segment. For private markets, OIM integrates a comprehensive analysis of ESG issues into the due diligence process. We are exploring GRESB as an ESG benchmark for core real estate.

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