Demonstrating your ESG credentials
Environmental, social and governance (ESG) investing has moved much closer to the centre of trustees’ and pension managers’ concerns over the past few years. To help trustees grappling with having to evidence implementation of their policies, we share how we are demonstrating ESG integration in our multi-asset portfolios.
From October 2020, trustees must produce an implementation report explaining how they have followed and acted on the investment policies outlined in their SIP. It’s not just regulators that are interested in these developments; members of DC pension schemes are now increasingly challenging trustees as to how their money is being invested. Schroders Global Investor Study 2019, which questioned over 25,000 individual investors globally, found that 61% believe all investment funds should consider sustainability factors.
The evidencing problem today
While most asset managers are embracing sustainability, the resulting multiplicity of reporting methods presents schemes with a problem; reconciling different styles and formats of reports also makes it difficult to see the underlying picture. We have no easy answers, but believe the starting point is to understand how a manager is approaching integrating sustainability and then consider how different data sets and proprietary tools can build a picture that meets the requirement of regulators and members.