Sustainable investment must be driven by data, if pension funds are going to find “meaningful solutions" to Environmental, Social and Governance (ESG) issues, it has been said.

Speaking at the World Pensions and Investment Forum yesterday, 22 March 2018, Legal and General Investment Management head of sustainability and responsible investment, Meryam Omi, said that through the development of data, clients will be able to better assess the impact of their investments and achieve pension fund's sustainability goals.

The panel, discussing sustainability in investment after the Paris Agreement, also said that the matrix that measures ESG impacts must improve to show ESG's true value, warning against the “short-term” mindset of investors.

Omi said: “The thing for me today is the development of data and the use of it as an ESG driver, I think we need to find better ways of analysing the data and come up with investment solutions that we couldn’t have done three or four years ago.

“There are a lot of frameworks coming out that will help us standardise this data so we can come up with investment solutions that show that from a return perspective we are not compromising.

“Data allows you, the clients, to invest in places and find out what's going on … the data helps you find out what impact they [the investments] have had and to make a judgement to achieve what the pension fund has asked you to do.”

A survey of 100 institutional investors by LGT Capital Partners found that 69 per cent of their members are concerned about ESG issues.

Industries such as energy, the automotive sector and food are seen as critical in order to reverse the impact of climate change going forward.

BNP Paribas head of asset owners Florence Fontan, added: “There needs to be a framework to help the industry understand.

“Another think we can do is force investors to publish their assessments on ESG, but then it’s how you actually action them."

Earlier this month, USS head of equities Elizabeth Fernando said that climate risk could be the single biggest risk to all portfolios.

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