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Relative performance evaluation and pension investment management: A challenge for ESG investing

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  • Himick, Darlene

Abstract

The fund management industry is the primary investment arm of the pension funds that control a significant portion of global capital market assets. Pension assets are frequently cited as vehicles for the use of “environmental, social and governance” (ESG) factors in investing for broader, extra-financial aims. Yet, compensation practices in the pension investment management industry remain focused on relative performance. This study examines the use of relative performance evaluation (RPE) as a form of compensation and control, including its historical emergence, using a genealogical history that attempts to provide some critique of its current day usage. In doing so, it follows the call by Norman Macintosh to both examine the social embeddedness of accounting, and to engage in reflexive accounting histories. The study argues that continued focus on relative results may pose challenges to incorporating ESG factors, and that further study of the RPE technique is needed, particularly with the increased focus on ESG at the policy level.

Suggested Citation

  • Himick, Darlene, 2011. "Relative performance evaluation and pension investment management: A challenge for ESG investing," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(2), pages 158-171.
    • Handle: RePEc:eee:crpeac:v:22:y:2011:i:2:p:158-171
    DOI: 10.1016/j.cpa.2010.07.002
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    2. Salvatore Esposito De Falco & Raffaella Montera & Sabrina Leo & Francesco Laviola & Pietro Vito & Domenico Sardanelli & Gianpaolo Basile & Giulia Nevi & Raffaele Alaia, 2024. "Trends and patterns in ESG research: A bibliometric odyssey and research agenda," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 31(5), pages 3703-3723, September.
    3. Linda Espahbodi & Reza Espahbodi & Norma Juma & Amy Westbrook, 2019. "Sustainability priorities, corporate strategy, and investor behavior," Review of Financial Economics, John Wiley & Sons, vol. 37(1), pages 149-167, January.
    4. Nikidehaghani, Mona & Cortese, Corinne & Hui-Truscott, Freda, 2021. "Accounting and pastoral power in Australian disability welfare reform," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 80(C).
    5. Kaspar Villadsen & Johannes Lundberg, 2023. "Guest Editors’ Introduction to Special Issue: ‘Foucault, Corporate Social Responsibility, and Corporate Sustainability’," Sustainability, MDPI, vol. 15(6), pages 1-11, March.

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