• Home
  • Admin/Tech
  • Benefits
  • Buzz
  • DB
  • DC
  • Diversity
  • Investment
  • Law & regulation
  • Risk reduction
  • Events
  • Whitepapers
  • Spotlights
  • Digital Edition
  • PPTV
  • Newsletters
  • Sign in
  •  
      • Newsletters
      • Account details
      • Contact support
      • Sign out
     
    •  

      You are currently accessing ProfessionalPensions via your Enterprise account.

      If you already have an account please use the link below to sign in.

      If you have any problems with your access or would like to request an individual access account please contact our customer service team.

      Phone: +44 (0) 1858 438800

      Email: [email protected]

      • Sign in
  • Follow us
    • Twitter
    • LinkedIn
    • Newsletters
    • YouTube
  • Register
  • Subscribe
  • Events
    • Upcoming events
      event logo
      WSB Webinar: Tackling financial wellbeing in the workplace

      This webinar will explore how employers can help employees take control of their finances through the provision of financial education and guidance. It will look at how such financial education programmes should be delivered to ensure maximum engagement as well as the content such offerings should include.

      • Date: 23 Feb 2021
      • Webinar
      event logo
      Webinar - LGIM Climate Solutions: how we measure climate risk and alignment in investors’ portfolios

      As investors move to incorporate a greater focus on climate change into their portfolios, there is an increasing requirement to be able to quantify and report on the climate credentials of investments and to what extent they are aligned with the goals of the Paris Agreement.In this webinar, LGIM explain how they quantify portfolio alignment with the Paris goals, using a combination of historical and forward-looking measures.

      • Date: 24 Feb 2021
      • Webinar
      event logo
      Admin & Data Forum 2021

      This concise half-day event will explore a variety of different issues affecting scheme managers, through a combination of informative presentations and interactive panel debates, including GMP equalisation, the pensions dashboard, the accuracy and quality of members data and the latest trends in scheme administration.

      • Date: 04 Mar 2021
      event logo
      Defined Benefit Consolidation Conference

      Professional Pensions is hosting this concise digital event on the 25th March to provide a crucial update on where the current regulation stands on DB Consolidators, assess the different models available, what the expected funding levels are and the governance requirements. This event will be a combination of short presentations followed by live Q&A’s with our expert speakers allowing plenty of time to answer your questions.

      • Date: 25 Mar 2021
      • Digital Conference
      View all events
      Follow our Professional Pension Events

      Sign up to receive email alerts about our events

      Sign up

  • Whitepapers
    • How DC schemes can gain exposure to different asset classes in a low-return environment

      So far, DC plans have largely been focused on the onset of auto-enrolment and changes to the regulatory framework - be it the ‘charge cap,' ‘pension freedoms' or consultations around ‘value for money', says Annabel Tonry, Executive Director at J.P. Morgan Asset Management (JPMAM).

      Download
      Pension freedoms three years on

      In 2015 George Osborne, then the UK Chancellor of the Exchequer, decided that those age over 55 could take much more of their pension in cash. This has since opened up a range of possibilities for DC scheme members in the world of pensions.

      Download
      Find whitepapers
      Search by title or subject area
      View all whitepapers
  • Spotlights
  • Digital Edition
Professional Pensions
Professional Pensions
  • Home
  • Admin/Tech
  • Benefits
  • Buzz
  • DB
  • DC
  • Diversity
  • Investment
  • Law & regulation
  • Risk reduction
 
    • Newsletters
    • Account details
    • Contact support
    • Sign out
 
  •  

    You are currently accessing ProfessionalPensions via your Enterprise account.

    If you already have an account please use the link below to sign in.

    If you have any problems with your access or would like to request an individual access account please contact our customer service team.

    Phone: +44 (0) 1858 438800

    Email: [email protected]

    • Sign in
  • Investment

Why ESG has a branding problem

Why ESG has a branding problem
  • Jonathan Stapleton
  • Jonathan Stapleton
  • @jonstapleton
  • 10 May 2019
  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
0 Comments

For too long, ESG has been talked about as if it were something outside our main investment process. Jonathan Stapleton says this must change.

The trouble with ESG is that it has long been associated - in some people's minds at least - with tree-hugging, lentil-munching, sandal-wearing hippies rather than 'level-headed', outcome-orientated investment professionals.

And while direct action by Extinction Rebellion and the activism by Greta Thunberg has increased the profile of the issue of climate change, it has also reinforced the above stereotype. Surely, proper people don't protest?

Related articles

  • Covid has forced us to a crossroads for tech
  • Guy Opperman: Landmark legislation moves pensions into the digital age
  • 'Good' net-zero pensions: Turning commitment into action
  • Working together to make a good bill better

But so-called ‘proper' people are taking a stand as well. This week the Committee on Climate Change - the statutory body established under the Climate Change Act 2008 to advise the government - said the government must immediately set a legally binding target to cut greenhouse gas emissions to zero by 2050.

It said doing so would be challenging - and mean the end of gas boilers as well as petrol and diesel cars, less meat on plates, a four-fold increase in clean electricity generation and necessitate the planting of an estimated 1.5bn trees.

But what does all this have to do with the investment of pension scheme assets? Surely, trustees should only be focussing on the financial returns of the assets in which they invest?

Yet, as many trustees now realise, ESG has everything to do with the financial returns on offer.

Take car manufacturers as one example. Do you really believe that, with the increase in regulation around carbon fuels, those businesses that don't adapt to a zero-carbon future will be as profitable in 20 years' time?

High-carbon businesses will face increasing levels of taxation, more regulation and, as such, produce lower profits.

And CO2 emissions are only one part of this. Governments are also reacting to tackle a range of other negative externalities that firms are responsible for - as well as a broad range of other environmental, social and governance challenges.

Clearly, businesses that adapt to this new world and tackle these challenges will be more sustainable and more profitable in future. As Richard Butcher says, ESG is all about managing investment risk - and this broad range of ESG risks must be considered in the same way as any other investment risk.

But there are huge swathes of investment where all these risks can't be considered - in the bulk of passive asset management, for instance, where it is generally not possible to underweight a high-carbon stock or sector, or deviate from the index at all.

At a time when the weight of opinion is shifting towards incorporating ESG risks into decision making processes, investors are increasingly switching to passive vehicles where it nigh-on impossible to take such risks into account. This is particularly true in DC where, with a few high-profile exceptions, most schemes are invested passively with no regards to ESG risk at all.

ESG has a real branding problem. As soon as we can stop talking about this as being outside our investment process, and focus on it as an integral part of risk assessment, incorporating it into all of our portfolios, rather than just some of them, the better.

Jonathan Stapleton is editor of Professional Pensions

  • Tweet  
  • Facebook  
  • LinkedIn  
  • Send to  
  • Topics
  • Investment
  • environmental, social and corporate governance
  • carbon emissions
  • CO2
  • Extinction Rebellion
  • passive investment
  • DC
  • defined contribution
  • low-carbon economy
  • Professional Pensions
  • Greta Thunberg
  • Jonathan Stapleton

More on Investment

More than half said global warming is an ‘extremely’ or ‘very’ important issue to them
Most savers unaware of how their pension scheme is tackling climate change

Savers are mostly unaware of the steps their workplace pension schemes are taking to tackle and reduce the impact of climate change, according to research by the Pensions and Lifetime Standards Association (PLSA).

  • Investment
  • 17 February 2021
Nusseibeh: We still as an industry have a short-term horizon serving long-term needs.
Investment management 'not fit for purpose' in delivering sustainable wealth creation

The overall business model of the investment management industry needs to be reengineered to deliver sustainable wealth creation that spans decades, not quarterly targets, says the 300 Club.

  • Investment
  • 17 February 2021
The FCA has faced criticism for the pace and scope of its own probe into the collapse of Woodford IM.
FCA partners with Jersey regulator to probe new Woodford venture

The Financial Conduct Authority (FCA) has broken its silence on Neil Woodford's return to fund management with confirmation that it is working alongside the Jersey regulator to share information on the new venture.

  • Investment
  • 17 February 2021
Market Movers blog: What's the latest in markets?
Market Movers Blog: Investors rush for Italian bonds as Draghi becomes prime minister

In this live blog, Professional Pensions' sister title Investment Week collates all the breaking market news, analysis and opinion on equity, bond and currency movements as well as the impact of trade wars, tightening monetary policy and the Brexit negotiations....

  • Investment
  • 17 February 2021
The funds cover global equity, multi-asset, global fixed interest, and US equity asset classes
Scottish Widows Master Trust launches responsible investment-focused fund range

Scottish Widows Master Trust has expanded its fund range with the launch of five ESG funds, offering greater choice for members looking to invest their pension more sustainably.

  • Investment
  • 16 February 2021
blog comments powered by Disqus
Back to Top

Most read

Government sets out plans to raise normal minimum pensions age to 57 by 2028
Government sets out plans to raise normal minimum pensions age to 57 by 2028
Pension Schemes Act 2021 becomes law with DB, CDC, ESG and dashboard rules
Pension Schemes Act 2021 becomes law with DB, CDC, ESG and dashboard rules
Updated: GMP Equalisation Working Group publishes guidance on tax issues
Updated: GMP Equalisation Working Group publishes guidance on tax issues
Opperman: Secondary legislation now priority following Royal Assent for Pension Schemes Act
Opperman: Secondary legislation now priority following Royal Assent for Pension Schemes Act
Deutsche Bank agrees £570m buy-in with L&G
Deutsche Bank agrees £570m buy-in with L&G
Trustpilot

 

  • Contact Us
  • Marketing solutions
  • About Incisive Media
  • Terms and conditions
  • Policies
  • Careers
  • Twitter
  • LinkedIn
  • Newsletters
  • YouTube

© Incisive Business Media (IP) Limited, Published by Incisive Business Media Limited, New London House, 172 Drury Lane, London WC2B 5QR, registered in England and Wales with company registration numbers 09177174 & 09178013

Digital publisher of the year
Digital publisher of the year 2010, 2013, 2016 & 2017
Loading