Fund firms urge pensions to do more on climate change

Asset managers believe that pension schemes should manage climate change through their investment portfolios

Around 80% of fund managers believe that pension schemes should seek to positively influence climate change through the assets their hold in their portfolios.

The headline findings were from a series of polls of asset management professionals attending the 2019 XPS investment management conference on Thursday (25 April).

Sarita Gosrani, head of ESG research at XPS Investment, said she the poll showed that fund manager thinking was aligned with that of investment consultants.

“We think that as a minimum ESG should be embedded within the risk management and decision making of all fund managers,” she explained.

“However, the fund managers surveyed have demonstrated a desire for pension schemes to go one step further and seek to actually make a positive contribution.”

The results follow recent research published by State Street Global Advisors, which found that 90% of businesses have no idea how climate change will impact their supply chain, with most having made no provision for how this could impact raw materials.

At the XPS conference, fund managers were also asked to specify the area where they expected to see the greatest innovations in the coming months. Some 40% of those polled said it would be in areas relating to environmental, social or governance based investing.

Simeon Willis, chief investment officer at XPS Investment, said he still holds concerns that confusion is lingering around the definitions of sustainable, ethical and impact investments, and warned that greater clarity was needed over the wider ESG taxonomy.

He said: “Our position is that ESG integration and stewardship are fundamental parts of risk management but further, pension schemes have an opportunity to make a positive impact.  It is great to see the fund management community supporting this aspiration.

“XPS Investment has minimum ESG requirements that fund managers must meet before we will recommend them to our clients.”