Cost of living trumps ESG for schemes
The cost of living crisis is seen as a greater priority than ESG (environment, social and corporate governance) by some pension funds, a survey by the Pensions and Lifetime Savings Association (PLSA) has revealed.
The survey, unveiled at the PLSA’s annual ESG conference in London this week, found the number of pension schemes committed to net-zero carbon emissions has risen by 11 per cent to 68 per cent in the last 18 months.Nine out of 10 of the schemes committed to net-zero had a 2050 target of net-zero compliance, while 13 per cent had a target of 2035 and 18 per cent had a target date of 2040.But the number of schemes whose focus on ESG had been pushed aside by other priorities including the cost-of-living crisis increased to 30 per cent, compared with 12 per cent 18 months previously.
The PLSA, which launched a cost of living hub for schemes earlier this year, said it was pleased with progress, but that it was important the government delivered on its green transition strategy.
Emma Douglas, chair of the PLSA, told delegates a third of members surveyed were not familiar with the obligations around the Taskforce on Nature-related Financial Disclosures (TNFD) but that 75 per cent of members who were said the data provided had improved.
Pension funds have pivotal role in climate change
Delegates at the PLSA ESG conference heard that pension funds and asset managers had an important role to play in bringing about climate change.
James Richardson, director of analysis and chief economist of theClimate Change Committee urged pension funds and asset managers to look at how they could invest more in helping the transition.
He said there was a need for £60bn of additional investment in low carbon activities and the pensions industry - with its clout - could help progress both large and small projects.
Richardson said progress on large projects, including government deals with Tata Steel and British Steel had helped make a difference but that smaller changes, on a large scale, were needed, including the adoption of heat pumps and electric vehicles.
Pensions and ESG: emerging markets have role to play
Fiona Manning, fund manager at Premier Miton, said emerging markets were coming back into their own after a “decade of misery”.
The emerging markets specialist said many of the world’s developing economies had gone through 10 painful years and were now more self sufficient.
Urbanisation, the globalisation of supply chains and the growth of internally generated capital - rather than a reliance on the US dollar and the US economy - meant they could now focus on climate change objectives.
Manning pointed out that asset managers would need to focus beyond ‘index-linked’ assets, as there were more individual opportunities emerging.
Manning added: “Investing in emerging markets is the greatest construction project we have seen for decades.
“Allocating actively can deliver financial returns and positive sustainable outcomes.”
