The frosty yet sunny weather of early January felt like an auspicious start to 2024. Last year was filled with many professional successes – from winning awards to being asked to moderate events – and I’m curious to see what the next 12 months will bring! The first article of the year, published in Pensions Expert, asked if DC schemes and asset managers are ready to put climate change at the heart of their portfolios. My latest piece for MandateWire looks at the implications of asset owners wanting managers’ sustainable investment purpose to align with their views. A feature for Professional Pensions examines if net zero targets are creating the wrong incentives for asset owners and how to focus better on real world change. This year also brings exciting changes to my sustainable networking events – get in touch if you would like to learn more.

Making net zero a reality

My first article of the year asks if UK DC schemes and asset managers are ready to put climate change at the heart of how their portfolios are managed. This article builds on a previous piece written for Pensions Expert where I discussed how the long-term impact of TCFD would be to place a greater emphasis on stewardship. As more of the investment chain adopts net zero targets, pressure to become effective at engagement will only increase. This challenge is going to be particularly acute for DC schemes with their reliance on passive equities. As universal owners, engagement will be the way to create real world change. But this will require asset managers to get to grips with data, transition plans and stewardship challenges, which will all require significant investment. It’s not, however, all on asset managers: DC providers will need to get away from viewing low cost as a proxy for value and understand asset managers spending more on stewardship will create better long-term value for members

Consolidation risks diluting asset managers ESG messaging

Asset owners increasingly want managers with sustainable investment beliefs which align with their own views. This creates challenges for those firms which achieve growth through acquisition. In my latest feature for MandateWire I look at how investment consultants want those acquisitive organisations to ensure each manager maintains its own distinct brand. Questions are also being asked if the mega-managers will be able to maintain their global reach as political approaches to sustainability fragment. Nor can asset managers hope to avoid the politics by staying silent – investment consultants are looking for managers who will engage and shape policy. A boutique manager with a clear sustainable investment purpose will, however, be in a strong position.

Getting to grips with net-zero targets

Are net zero targets incentivising the wrong behaviour? That’s the question my latest piece for Professional Pensions examines. Given the urgency of the climate change crisis, it’s understandable some asset owners want to be net zero before 2050. But such goals can often be counterproductive. The real question is whether the scheme views net zero as a carbon accounting exercise or a driver of real change. If you want real world change then asset owners should be focusing on actions like accelerating demands for Scope 3 emissions to be included in decarbonisation plans, building targets for specific industries which are run collaboratively and being more involved in policy advocacy.

Networking events update

When the pandemic receded, I felt frustrated there wasn’t a forum for institutional investors to discuss the complex and conflicting issues associated with sustainable investing. I started my networking events to meet this need. Over the last two years we have succeeded in building a fantastic community. My attendees have helped me to create the space the industry needs to foster independent thought, share insights and enable honest interactions. As sustainable investment evolves, we need to broaden the depth of our discussion to include policy makers, businesses and other stakeholders. I’ll be unveiling the first of these new style events in the next few months – stay tuned!

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