Caroline Escott was senior policy lead of investment and stewardship at the PLSA.
Covid-19 has demonstrated the level of work and co-ordinated activity required to tackle big, compound risks, as well as the interrelation between the environment and our economy.
It is a lesson the investment industry should learn, to better tackle another issue which poses a systemic risk to nearly every business in every sector: climate change.
Although UK pension schemes have often led the way on responsible investment, new disclosure duties for UK pension schemes have contributed to a stepchange in scheme investors’ appetite and consequently to a proliferation of ‘ESG’ products and services further down the investment chain.
Climate change is a complicated issue, which requires a multi-faceted response. Where asset managers, investment consultants, legal advisers and companies work in alignment across the value chain to give pension schemes the high-quality and relevant information and support they need to effectively consider climate in their investment decisions.
The PLSA plays a unique role in bringing these factors together and, given the pressing nature of the climate emergency, we continue to progress our “Investing for Good” programme to tackle climate change in 2020 and beyond.
To further explore the barriers and ensure we respond with tailored solutions, the PLSA has been hosting a series of virtual roundtable discussions with our members, hosted by PLSA chair Richard Butcher.
We’ve been delighted with the response and the quality of the feedback, which will help shape our policy proposals to encourage effective climate investment across the investment chain, and in savers’ best interests.
We also recognise the need to help guide our members through the maze of recent (and forthcoming) regulatory changes. This year we’ve published our 2020 Stewardship Guidance and Voting Guidelines – the most downloaded PLSA report of the year so far where we offer practical guidance to scheme investors on how to assess (and support) shareholder resolutions on climate, as well as how to hold company directors individually accountable on their management of climate risks.
And with savers at one end of the chain showing a growing interest in where their money is invested at the other end, we are about to publish practical guidance for schemes to help them produce clear, meaningful disclosures on (responsible) investment which are compliant and relevant to beneficiaries.
This is not to downplay the significant amount of excellent work schemes are already undertaking in this space. In fact, the PLSA is also pulling together case studies from our pension scheme members which showcase best practice in the pensions and investment industry, to support others in their learning and to help influence the public debate.
Pension schemes can wield significant influence, drawing good practice up through the investment chain. Recent months have seen pension schemes work effectively and efficiently with their advisers and managers on the serious challenges arising from Covid-19, while clearly communicating simple, effective messages to savers.