Investors are increasingly concerned with the social impact of their portfolios, speakers at the Pensions and Lifetime Savings Association (PLSA) conference, said.
Held in Edinburgh over three days in March, ESG themes dominated the discussions, with speakers suggesting companies need time to change.
In a panel session, Caroline Escott, policy lead for investment and stewardship at the PLSA said: “We think that there is a definite merit in trying to encourage schemes to invest in a way which has a positive impact on the world into which beneficiaries are going to retire.”
In recent years, investor adoption of ESG and the subsequent growth in ESG assets under management has accelerated. Data published by Morningstar at the end of 2018 showed assets under management in ESG funds had surpassed the $1trn mark.
Carola van Lamoen, head of active ownership at Robeco, said: “We see that several companies have committed to ambitions, so there are some good hopes, but our engagement is not finished, we are working on other improvements.
“Companies with products that you cannot engage with, for example, weapons or tobacco, you cannot have a useful conversation. If you are talking about behaviour where improvement is needed, then it makes sense to have a discussion to improve the companies behaviour.”
For Chris Gower, director, global consultants and pension funds at Fulcrum Asset Management, the challenge is how to invest in the wider themes.
“Clean energy is an interesting one. It is an easy identifiable theme, but how you invest in it is a real challenge,” he said.
“If you step back and take a longer term view, you can look for companies that are developing and integrating in the renewable sector and the clean energy space, not just solar, but in the whole supply chains.”
– See Caroline Escott’s speaking about the changing trends in ESG here.