Pensions and Capital Stewardship Project


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coverOccasional Papers, No. 6

Going on Automatic:  The Right Path Toward Retirement Income Security For All?

By Larry Beeferman and Matthew B. Becker

Households in the United States face serious challenges to enjoying income security in retirement. This paper critically appraises two policy initiatives ostensibly geared to helping to meet those challenges.  One already embodied in law - the federal Pension Protection Act of 2006 (the "Act") - and the other in the form of Obama administration and legislative proposals, use automatic enrollment in employment-based defined contribution (DC) plans and Individual Retirement Accounts, respectively, along with default investments as means toward that end.

The paper describes the rationales offered at the time for the Act's provisions, the manner in which the enacted policies have been implemented, and how effective they have been and are likely to be. It assesses the strength of the evidence available at the time to support advocates' contentions that automatic enrollment would be a success. It then considers the post-enactment literature on the outcomes of automatic enrollment. It follows with a review of the literature on persistence (over time) of contributions to defined contribution (DC) plans and how realistic or justifiable were expectations for the success of the Act's provisions. The paper then characterizes the IRA proposals and examines studies of the persistence of contributions to IRAs. Next it evaluates the workings and outcomes of New Zealand's KiwiSaver scheme, the one already in operation which most closely resembles what proponents urge should be done with respect to IRAs. Finally, drawing on the findings and observations in the preceding sections, the paper offers a broader perspective on the directions policy should take if there is to be a serious prospect of ensuring retirement income security for all households in this country.

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coverOccasional Papers, No. 5

Benchmarking Corporate Policies on Labor and Human Rights in Global Supply Chains

By Aaron Bernstein and Christopher Greenwald

Near majorities of large corporations have labor and human rights (LHR) policies covering their global supply chains, although far fewer have established follow-up monitoring and enforcement mechanisms. LHR supply-chain policies are also close to the norm among European companies, with the United States and Asia lagging behind. These findings are contained in the first study to benchmark LHR policies among the 2,500 companies found on the major stock market indices. The study was done by Pensions Project Senior Fellow Aaron Bernstein and Christopher Greenwald, Director of Data Content at the Swiss firm ASSET4, using ASSET4 data.

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coverOccasional Papers, No. 4

Quantifying Labor and Human Rights Portfolio Risk

By Aaron Bernstein

This paper explores how pension funds and other investors can obtain data on the long- term sustainability risks posed by the labor and human rights (LHR) activities of global corporations, with a specific focus on supply chains. It should be read as a companion piece to Bernstein's “Incorporating Labor and Human Rights Risk into Investment Decisions" (Occasional Paper, No. 2)

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coverOccasional Papers, No. 3

Pension Fund Investment in Infrastructure: A Resource Paper

By Larry W. Beeferman

Pension funds are increasingly giving thought to investment in infrastructure in an effort to achieve substantial and stable returns that are a match for funds' long-term liabilities. This paper describes risk, reward, and other financial considerations that bear on that thinking. The paper also discusses concerns about the job and labor implications of such investments and pension fund and other response to those concerns.

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Occasional Papers 2Occasional Papers, No. 2

Incorporating Labor and Human Rights Risk Into Investment Decisions

By Aaron Bernstein

Mainstream investors for the first time are beginning to assess labor and human rights factors as a way of increasing returns and lowering risk as part of a broader movement in the investment world to include corporate environmental, social, and governance (ESG) behavior into portfolio and lending decisions. However, the paper also describes why investment analysis of labor and human rights poses some of the most difficult challenges in the emerging ESG field.

[Downlad Full paper]

Capital Matters, Stock Market, Private Equity, Retirement
Occasional Papers, No. 1

Can VEBAs alleviate retiree health care problems?

By Aaron Bernstein

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Other Pension Papers


By  Larry W. Beeferman, Director, Pensions and Capital Stewardship Project, LWP and
Dr Allan Wain, Head of Research and Strategy CP2 and LWP Fellow.paper cover

May 2016

Despite the size of what has been termed the “Islamic Finance market” – currently in the range of $2 Trillion – and the expectation that it will, in coming years, continue to grow rapidly, many investors have little or no familiarity with it. Precisely what is meant by the phrase varies. It might be cast as finance, the understanding and practice of which is informed in some measure by “the Islamic narrative”; that is, accounts of the world and the place of people within and their relations to it drawn from the constellation of beliefs, commitments, and practices associated with Islam. The paper seeks to introduce investors to the potential relevance and significance of Islamic Finance for the decisions that they make. It does so through an exploration of views about the “real” in three related senses: prominent efforts, within the context of Western finance, to promote investment in so-called “real assets”; especially in the wake of the Global Financial Crisis, concern about “financialization,” particularly as it pertains to ideas about and the relationships between a so-called “real economy” and a/the financial sector or sphere; and the importance of notions of the “real” which are quite prominent in characterizations of the conceptual underpinnings for and the practice of Islamic finance.

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The Materiality of Human Capital to Corporate Financial Performance

By  Larry W. Beeferman, Director, Pensions and Capital Stewardship Project, LWP and
Aaron Bernstein, Pensions Project Senior Fellow, LWPpaper cover

April 2015.

Much attention has been given by pension funds and other institutional investors to governance and in some measure environmental considerations in their investment-related decisions, spurred by either by normative concerns and/or their impact on financial performance. However, very little has been done in the latter terms with respect to what are often termed social considerations, which include work-related matters. This publication represents an effort to begin to remedy that problem.

More particularly, of the many published studies of human capital policies, the paper examines 92 that focus on the links to corporate financial performance. A large majority of the studies – covering a period of two decades and encompassing dozens of countries and industries - reported positive correlations. The paper summarizes key aspects of the research, reviews the methods and approaches they employ, and discusses strengths of and limitations to the findings. Overall, the paper suggests that human capital management can be material to a company’s financial performance. It recommends the kinds of information which investors should seek – among them, about the array of a company’s human capital policies, their relationship to one another, and their link to the company’s business strategy, and measures outcomes and financial impacts – and companies should provide.

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Whose Power? Whose and Which Duties? Pension Fund Investments and Fiduciary Duties in the United States an India

By  Larry W. Beeferman, Director, Pensions and Capital Stewardship Project, LWP and
Dr. Allan Wain, Head of Strategic Development, Hastings and LWP Fellow
india mapusmapflag
February 2015

The focus of the paper is on retirement plans whose members derive financial claims directly or indirectly from financial investments made by them or by others on their behalf (as contrasted with what are termed “pay-as-you-go” plans). Central to the efficacy of funded plans are the roles and responsibilities of those with ultimate authority to make the required investment- related decisions and effective fulfillment of them by those to whom we refer to as “investment decision-makers”.) Although the matter of efficacy quite obviously is rooted in concern for sought-for outcomes for individual plan members there are also significant implications for the larger economy and society. Discussion with respect to those roles and responsibilities often falls in whole or part under the rubric of what is termed “fiduciary duty”; however, there are other important and related roles and responsibilities which occasion the choice of title for the paper.

More particularly, it considers key issues encompassed by discourse in India and the United States pertaining to fiduciary duty as they concern investment decision makers. In part the premise is that there can be much that each country can learn from the other in view of their different experiences in that regard. In part it is also in recognition of the fact that retirement plans in each country have made or may make investments in the other and that insofar as such investments might be mutually desirable having a sufficient understanding of how fiduciary duty shapes the expectations and channels the needs of plan members is critical to achievement of that shared goal.

In our view the available literature in these terms has been modest indeed so in a number of respects it has been unchartered territory. Moreover, the retirement systems in both countries are composed of a range of rather different kinds of plans, many of which have a rich and varied history and diverse associated institutions, policies, and practices the attributes of which are not immediately or readily made transparent or accessible, especially to those in another country.

With that in mind, this paper sets the stage for and makes an initial foray into debate in both countries in relevant terms, identifying key concepts and modes of thinking and implementation. We strive to flesh out the foregoing by an in-depth illustrative discussion of the issues as they relate to one important kind of plan within the retirement system of each country. We do so with any eye to structuring the analysis to establish the basis for an inquiry in a subsequent essay with not only potentially greater depth but also a broader reach in terms of the types of plans canvassed. In the concluding section of this paper we offer what might be termed observations but which may also be viewed as recommendations for others concerned with these issues, especially those with authority as to what fiduciary duty should entail. That being said we do so recognizing that given the distinctive experience of each country those observations (or recommendations) may have greater or less import or play out in a different way.

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“Reform” of the United States and Brazilian Retirement Systems for Federal Employees

By  Larry W. Beeferman, Director, Pensions and Capital Stewardship Project, LWP and
Arthur Bragança de V. Weintraub, Law Professor at the Federal University of São Paulo. logo

Revista Brasileira de Previdência, Universidade Federal de São Paulo (UNIFESP),
September 10, 2014

Recently, Brazil made changes to its retirement system as it concerned public sector workers, changes which in certain ways were similar to those which occurred for most federal workers in the United States somewhat over a quarter of a century ago. Broadly speaking it involved the conversion of a purely pay-as-you-go defined benefit plans to a hybrid of a reduced pay-as-you- go defined benefit plan with a funded defined contribution plan. In the United States, the latter is called the Thrift Savings Plan which now has over 4.5 million participants and nearly $400 billion in assets.

This paper offers a brief history of the origins of the U.S. system up until the changes in question were made, what were among the major factors or considerations which appear to have spurred the changes, a little bit about the constituencies which seem to have driven or resisted change as the case may be, the modifications that were envisioned, and expectations as to the difference that was expected to be wrought from those alterations. It canvases the differences between the then “old” and the “new” systems in relation to what was ostensibly sought to be achieved. It then draws on what is a surprisingly thin literature to describe the outcomes of the changes more than 25 years later with an eye to hoped-for or anticipated results at the outset. We then detail important elements of the new Brazilian system – which is at an early stage – with an eye to similarities and differences between it and the one we have described with a focus on how the outcomes of the system in the U.S. might bear on thinking in Brazil as it moves forward with its own. We conclude briefly with thoughts on the nature and merits of further pursuing the comparison and inquiry.

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“Paradigm lost: employment-based defined benefit plans and the current understanding of fiduciary duty,”

By  Larry W. Beeferman

Cambridge Handbook of Institutional Investment and Fiduciary Duty,
ed. James P. Hawley, Andreas G. F. Hoepner, Keith L. Johnson, Joakim Sandberg, and Edward J. Waitzer,

Cambridge University Press, 2014,
pp. 110-111.

In this chapter we will contend the following: the trust model is a poor fit for the relationships in which plans are embedded. Those relationships warrant, at minimum, decision-makers considering members’ interests as workers at the associated enterprise, which derive from the financial risks of plan investments in other enterprises in general, and arguably the impact of harms that result from the behaviors of specific, sometimes competing enterprises. We express skepticism that these relationships justify taking account of members’ interests other than as members or workers. However it can be justified based on a different line of argument. It concerns the extent to which members (or others) who participate in collective vehicles for investment should retain the voice they would otherwise have with respect to advancement of their interests in the case of their own individual investment decisions. Vindication of a broader range of members’ interests might have merit as a matter of social policy rather than as one of advancing those interests for their own sake.

The foregoing points are made within the context of what is deemed to be decision-makers’ duty
of loyalty. However, we briefly explore the import of what is termed their “duty of care” for the issues explored. In doing so, we assert that the statutory framework that defined that duty was largely devoid of substantive content. The content was supplied by investment theories and practices at best insensitive to the relationships in which plans are grounded. Moreover, those theories and practices embodied problematic claims about the goals that might legitimately be pursued by the enterprises in which plans might invest. These claims stand in tension if not in direct conflict with those of members’ interests that decision-makers might appropriately seek to advance. The foregoing suggests a close or intimate connection between how fiduciary duty, with respect to investment in enterprises, and the legitimate goals that might be pursued by those enterprises are understood.

I N F R A S T R U C T U R E: Doing What Matters
February 2015

This paper has three main parts. First, we briefly explore arguments grounded in fiduciary duty (and others within the “shadow” of law) as well as others rooted in the real-world social, political, and other environment in which pension funds may operate which might justify why they might make or recognize such commitments.

Second, we explore in great depth how pension funds might proceed in those terms. We discuss the standards, criteria, etc. of which pension funds might take to take account or apply. But we suggest that the major challenge relates to the systems, processes, capacities, resources, etc. which they have in place to ensure fulfillment of that commitment. In turn we describe and analyze the extensive experience in these terms of other major financial institutions, namely, international development finance institutions (DFIs), for example, the International Finance Corporation (IFC), and somewhat similar national ones well that of the financial institution signatories (EPFIs) to what are termed the so-called Equator Principles (EP).

We then canvas important “cross-cutting issues”, ones which play out among many investors, for example, the matter of the relationship between how environmental and social considerations are addressed in investments and the financial performance of those investments. We also take a close look at practice relating to implementation of one aspect of standards involving social considerations, namely, labor-related standards. In addition, we draw on the relatively greater transparency of a large Dutch pension fund to offer some insights into how it goes about translating its commitments into action.

The last part of the essays distills from the preceding ones a series of “lessons learned.” That is, it offers recommendations as to what pension funds might need or want to think and then, what they might need or want to do should they choose to adopt standards relating to environmental and social considerations and, in turn, pursue a serious-minded effort to assure that those standards are met.

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I N F R A S T R U C T U R E: Deciding Matters
August 2013

This paper builds upon the understanding of infrastructure developed in “Infrastructure:Defining Matters.” Through a primarily case study approach it explores in-depth a particular method of deciding upon infrastructure investments and identifies ways that decision-making can be strengthened drawing upon that understanding and a revised version of the linked categories for analysis based on them, which were described in the previous publication.

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I N F R A S T R U C T U R E: Defining Matters
December 2012

This paper is resource for pension funds in two ways. One is to help them gain a more useful understanding of what infrastructure “is” or might be believed to “be.” The other is to suggest how that understanding relates to ways of thinking about infrastructure and how those ways, in turn, are linked to choices about infrastructure investments for their portfolios. The analysis and findings are based in part on a survey of U.S. public sector pension funds which have made such investments.

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Corporations Launch First-Of-A-Kind Testing Of
New Labor & Human Rights

Supply Chain Performance Indicators  

chainsFair Labor Association (FLA),
Harvard Law School’s Pension and Capital Stewardship Project, and
Investor Responsibility Research Center (IRRC) Institute

January 2012

Nine companies this month launched a process to test newly-developed Key Performance Indicators (KPIs) to assess reputational risks and operational shortcomings associated with labor and human rights factors in corporate supply chains. Collectively, these companies source goods from 1,755 factories that employ around 1.8 million workers in 62 countries.  Once tested, finalized, and implemented, these standardized KPIs could allow interested parties to assess companies’ progress toward reducing labor and human rights risks. 

[Download Press Release]

[Download Final Summary Report]

[Interview with Larry Beeferman in Law.Com]

Supply-Chain Labour and Human Rights


Sponsored by LUCRF Super, this study was commissioned by
The Australian Council of Superannuation Investors
and prepared by The Pensions and Capital Stewardship Project,
Labor and Worklife Program, Harvard Law School

December 2011

Prepared at the request of the Australian Council of Superannuation Investors (ACSI), this report  benchmarks the supply-chain labor and human rights policies of the S&P/ASX 200 (ASX 200) against 2,500 of the largest global companies building on the work of the Project’s previous publication “Benchmarking Corporate Policies on Labor and Human Rights in Global Supply Chains,” (Occasional Paper No. 5)  On the whole, the ASX 200 companies lag their peers in other listed markets, with a mere 17% issuing a labor and human rights policy covering their supply chain, versus 35% in the global sample. This trend carries across when analyzing company procedures to implement policies. There is some exception to this pattern for occupational health and safety policies of ASX 200 companies, which were notably strong, which may reflect the impact of strict health and safety legislation in Australia. The largest Australian companies (by market capitalization) also managed to measure up to their global peers on a number of indicators. The majority of ASX 200 firms however paled in comparison to the performance of the global sample.

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Capital Stewardship in the United States: Worker Voice and the Union Role in the Management of Pension Fund Assets

By BeefermanLarry W. Beeferman

Transfer: European Review of Labour and Research
February 2011 
vol. 17 no. 1, pp. 43-57

This article describes US unions’ efforts at capital stewardship, that is, the investment and management of the assets accumulated in pension and other retirement plans (frequently termed ‘workers’ or ‘labour’s capital’) — on behalf of plan participants and in the interest of workers more generally. It focuses particularly on the opportunities for direct worker voice in the governance and management of those assets through workers serving as trustees of the plans. The article explores the challenges these trustees face in navigating that role in addition to their possibly conflicting role as a union member or official. It details unions’ visions for capital stewardship and their efforts to integrate trustees’ activities within the broader range of union activities. Finally, it describes ways in which unions have collaborated in support of their trustees and to develop a cross-union capital stewardship agenda.

Origins of the Financial Markets Meltdown, the Need for Financial Reform, and the Dodd-Frank Bill Response

By Larry Beeferman

 Commissioned for the National Conference on Public Employee Retirement Systems, 

January 2011

This paper reviews: (1) what typically are seen as important near- or short-term causes linked to the financial crisis, (2) the kinds of individual and institutional behaviors that many believe contributed to these causes, (3) the most important among the provisions of recently enacted financial markets reform legislation – the Dodd-Frank Act – ostensibly calculated to change those behaviors, and (4) some critical perspective on whether the provisions are suited to the task.

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US Pension Funds’ Labour-Friendly Investments

By Tessa Hebb and Larry Beeferman
Larry Beeferman

Chapter 4 inThe "Social" in Social Security: Market, State and Associations in Retirement Provision,

Mark Hyde and John Dixon eds.,
Edwin Mellen Press, Lampeter, UK., 2010

This article explores the evolution of labor friendly US investments by pension funds in the period since the downturn of the financial markets in 2001. It argues that both pension funds and investment vehicles that bring intentional targeting to their investments are becoming increasingly sophisticated financial players. Labor friendly investments that focus on risk adjusted rates of return as the driver for investment are increasingly able to point to strong track records that encourage a wide range of pension fund investors to engage with these vehicles and practices.

[Link to book webpage at Mallen Press]

Private Equity and American Labor: Multiple, Pragmatic Responses Mirroring Labor’s Strengths and Weaknesses

By JIR logoLarry W. Beeferman

Journal of Industrial Relations,
Vol. 51, No. 4, pp. 545-558 (2009)

This article briefly describes the recent growth of private equity, details some of the challenges such growth has posed for American labor, and outlines ways in which labor has chosen to respond. In so doing it suggests that the diverse, complicated, and practical choices labor has made to date have been shaped by the particular strengths and weaknesses of its position in American society. More particularly, these choices place the emphasis on (1) legislative change, relating mainly to tax rather than regulatory policy (labor-related or otherwise); (2) capital strategies, by which unions and pension funds engage companies in connection with corporate governance and investments that might be made in or withheld from them; and (3) high-profile campaigns relating to the reputation of private equity firms and the companies in their portfolio.

[Click here to download Abstract ]

Pension Fund Investment in Infrastructure: A Resource Paper

By Larry W. Beeferman crossroads
Published in:
Pensions Occasional Papers,
Labor and Worklife Program

Pension funds are increasingly giving thought to investment in infrastructure in an effort to achieve substantial and stable returns that are a match for funds' long-term liabilities. This paper describes risk, reward, and other financial considerations that bear on that thinking. The paper also discusses concerns about the job and labor implications of such investments and pension fund and other response to those concerns.

[Download the paper]

Capital Matters Newsletter

Vol. 1, No. 4 | July 2008
Capital Matters, Stock Market, Private Equity, Retirement
•Experiments in Public Sector Pension Fund Design
•Accounting for Pension Fund Risk and Reward
• A Code of Conduct for Pension Trustees
• CEO Pay as a Proxy for Good Corporate Governance
• Defined Benefit and Defined Contribution Investment Returns Compared
• Labor, Human Rights and Investment Risk
[Capital Matters | July 2008]

Vol. 1, No. 3 | April 2008

Capital Matters, Stock Market, Private Equity, Retirement
•Understanding the Turmoil in Financial Markets
• ...What to Do
• 401(k)s Fall Short of Funding an Adequate Returement
• Can VEBAs Alleviate Retiree Health Care Woes
• SEffective Labor Representation on Pension Boards

[Capital Matters | April 2008]

Vol. 1, No. 2 | January 2008

Capital Matters, Stock Market, Private Equity, Retirement
• Point/Counterpoint: Infrastructure Investments
• What trustees can learn from San Diego
• Putting labor rights into investment decisions
• Trustee Perspective
• Sharing retirement-funding risk: The Dutch Solution

[Capital Matters | January 2008]

Vol. 1, No. 1 | October 2007
Capital Matters, Stock Market, Private Equity, Retirement

What can be done to improve America's retirement system? Is private equity really all it's cracked up to be? Find out in the premier edition of Capital Matters , the Pension and Capital Stewardship Project's newsletter.

[Capital Matters | October 2007]

Labor & Worklife Program at Harvard Law School
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A blog founded by Benjamin Sachs (LWP Faculty Co-DIrector) and Jack Goldsmith (Harvard Law School), devoted to workers, unions, and their politics.


  Wertheim Fellows
  John T. Dunlop Memorial Forum


Science and Engineering Workforce Project (SEWP)

The Labor and Worklife Program is supported in part by the Meyer Kestnbaum Fund for Labor and Industry, established in honor of Meyer Kestnbaum (1896-1960), president of Hart, Schaffner, and Marx, by his family and friends—a group that included both his company’s management and shareholders, and the Amalgamated Clothing Workers of America. The donors agreed in seeing the fund as an opportunity to support the Harvard community’s various activities in the field of industrial relations, industrial affairs and the problems and opportunities of industry, labor and government in a changing world.

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