Halloween is always a frightening end to the month of October. With COP26 starting next month, many have spent the past few weeks looking at what we should fear from climate change. As well as writing sustainable investment articles for magazines, I’ve added to my own series of posts. One piece looks at what it takes for asset manager to engage effectively with companies and improve corporate behaviour. In the second I ask why so many insist on talking about ESG investing – it’s a tool not a strategy! My latest article for Professional Pensions was published looking at whether DC funds can meet the government’s aim for an ‘investment big bang’. This month I also held my inaugural networking event, where we discussed what decisions asset owners and managers need governments to make at COP26. It felt so good to be in a pub with a group of people! If you, or your colleagues, would like to come to the next one, please send me a message and I’ll add you to the invite list.
Changing company behaviour
We hear a lot about the importance for asset managers to engage with companies to make them more sustainable but less about what’s involved to make these changes. This post takes a look at the resource-intensive business of effective engagement. It discusses how asset managers need sustainable investment teams to decide which campaigns to wage, then implement and monitor those strategies. Analysts are also needed to provide specific knowledge as conversations need to be tailored to individual companies’ requirements. This burden is only going to become more acute as the focus shifts to making net zero a reality.
What does ESG mean?
Why do asset managers insist on talking about ESG investing? Using a TLA just creates confusion. Even if you understand ESG refers to environmental, social and governance characteristics, you still won’t understand what a manager is trying to achieve. My latest piece explains how these characteristics are a tool not a strategy and how they are used by sustainable investors. It shows how a traditional active manager makes stock selections and why ESG factors enable them to assess a broader range of risks. I talk about how many pension schemes now use indices tilted towards more sustainable companies and how it has the potential to create problems.
Levelling up pension fund investments
My latest feature for Professional Pensions takes a closer look at whether pension funds can meet the government’s request for an ‘investment big bang’. The article examines whether infrastructure and venture capital are a good match for schemes’ objectives and their fiduciary duties to scheme members. I explain how many funds already invest in infrastructure and will allocate to projects with attractive valuations – which might be outside of the UK. Pension providers compete for market share on price making including venture capital in their portfolios unattractive because it could jack up their costs.
Meeting people in real life!
This month I held my inaugural networking event to discuss what decisions asset owners and managers need governments to make at COP26. It was exciting to be in a pub once again with a group of people and we had excellent evening filled with lively discussion. If you, or your colleagues, would like to come to the next one, please send me a message and I’ll add you to the invite list.