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Time to take control of climate-change investing

One of the most common complaints we hear regarding the concept of sustainable investing is the lack of specifics involved. The most common acronym – ESG – encompasses so much it is no wonder investors can feel overwhelmed and confused.

Asset managers haven’t exactly helped, throwing more jargon around (responsible investing is a pet peeve – were we all investing irresponsibly before?) and signing up to as many initiatives and campaign groups as possible without really explaining what it means for investment decisions and returns.

Arguably, campaign groups and investor collaborations haven’t always been helpful either. Every week there seems to be a new organisation or collective movement vying for investors’ limited time and resources, often trumpeting the amount of assets its supporters run while offering little in the way of concrete action beyond yet more discussions.

For this reason it is refreshing to see asset owners take control now and again. In October a smaller group of UK local authority pension funds announced their sustainable investment plans during Green GB Week. The plans were specific, measurable, clear, and with an obvious goal in mind: to help the international effort to limit global warming to less than 2°C above pre-industrial levels.

The Environment Agency Pension Fund was involved and continues to be a leader in this area, alongside the Brunel Pension Partnership, the asset pool it co-founded with nine other local authority funds. The Merseyside and Islington schemes have also pledged to roll out strategies to reduce their carbon footprints and boost sustainable infrastructure spending.

Large Dutch and Nordic asset owners have been putting money to work this way for years. It’s high time more investors and asset managers followed suit.

Nick Reeve, News Editor
nick.reeve@ipe.com

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