From myopic to focused engagement: an explorative perspective on Italian pension funds.

Framing of the research. This paper focuses on shareholder engagement as the core SRI strategy among institutional investors. Purpose of the paper. Since engagement is the preferred tool for European institutional investors, our aim was to investigate what determines (the lack of) engagement by pension funds, deepening the main critical issues and discussing possible factors that would improve ESG engagement for other pension funds. Methodology. The study is based on a structured survey administered to a sample of pension funds. Principal component analysis was used to compute factor indexes concerning the perceived benefits and hindering motivations of shareholder engagement, the impact of which on engagement propensity was then tested through OLS regression. Results. Based on our results, we defined a conceptual framework and affirmed that a virtuous path seems to emerge along which the approaches to engagement are shifting from negative factors that hinder engagement to positive aspects that create benefits. This means a shift from “myopic” to “focused engagement”, and this scenario provides a new relevant role for the pension funds in influencing the strategies and behaviours of investee companies in the long term. Research limitations. Since our study focuses on contractual pension funds, future studies could enlarge the scope of analysis to include other types of institutional investors. Managerial implications. This research aims to enable pension funds to account for the difficulties that they face in engagement processes and encourage a change in their behaviour through the implementation of possible adequate solutions. Originality of the paper. Notably, to the best of our knowledge, no previous studies analyse the experience of pension funds in relation to this specific topic. Therefore, this study could be a real novelty in the Italian context.