PLSA IC 24: Industry urged to consider climate and social issues holistically

More than half (57 per cent) of pension professionals have engaged asset managers on social factors but haven’t taken action themselves, a poll from the PLSA Investment Conference has found.

The polling also found that while majority (84 per cent) of pension professionals have set policies that cover social factors, there is still much more work to be done, with many of the respondents still in the earlier stages of their social investment journey.

In particular, the poll found that 57 per cent had engaged asset managers on social factors, but hadn't taken action themselves, while 7 per cent said that they have specified the importance of social factors but would like to do more.

Other considerations may also be taking attention away from social issues, as a further 7 per cent admitted that they haven't thought much about social factors instead focusing on the environment.

However, Scottish Widows Master Trust responsible investments manager, Lauren Peacock, argued that climate and social factors should be being considered holistically, arguing that "we've made a mistake in not connecting these two earlier”.

"When we talk about climate change or the effect on the environment or the planet, we are the planet and we are the environment, these aren't two separate things, so talking about them together is essential," she stated.

"And also thinking about the transition to a low economy, people are just so central to that. It takes planning and strategy to actually move the economy, because people need to get new jobs, they need to be trained, and you can't do that overnight."

Railpen head of external communications, Emma Barry, agreed, noting that there has been much more focus recently on a just transition recently, "and a just transition has to include social factors".

"They are not in isolation," she stated. "I think even with local areas when we look at the data, we can see that people want access to green space, they want access to community spaces, and all of that immediately ties back into what we are doing about climate," she added. "The lines are definitely becoming more than blurred between [climate and social issues]."

And whilst the panel acknowledged that the quantitative evidence for the financial case for integrating social issues has been limited and there isn't a quantitative evidence base, Peacock argued that there is an element of common sense in terms of building a business case.

The PLSA has also published a series of case studies to highlight best practice investment approaches that not only maximise returns but also make a positive impact on social factor, in order to offer tangible examples and guidance for its members.

The case studies include best practice examples from Scottish Widows, AXA Investment Managers, Franklin Templeton, Legal & General Investment Management, Railpen and Nest.

Commenting on the case studies, PLSA head of DB, LGPS and investment, Tiffany Tsang, said; “Many of our members are not only meeting fiduciary duties but also excelling in impactful investing.

“These case studies serve as a guide, empowering our members to navigate the challenges and opportunities presented by social factors - keeping these issues at the forefront of pension schemes' priorities.

“In an ideal world, 'E,' 'S,' and 'G' factors would be considered holistically. However, recent years have seen most of the focus on environmental issues.

"The public's growing interest in diversity, inclusion, modern slavery, and human rights has continued to heighten scrutiny on pension schemes' investment practices.”

Share Story:

Recent Stories

DB risks
Laura Blows discusses DB risks with Aon UK head of retirement policy, Matthew Arends, and Aon UK head of investment, Maria Johannessen, in Pensions Age's latest video interview

Sustainable equity investing in emerging markets
In these highlights of the latest Pensions Age video interview, Laura Blows speaks to Premier Miton Investors fund managers, Fiona Manning and Will Scholes, about sustainable investing in equities within emerging markets

Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets
High-yield Investing
Laura Blows discusses short duration global high-yield strategies with Royal London Asset Management head of global credit, Azhar Hussain, in the latest Pensions Age podcast