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Impact Investing

IPE special report May 2018

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ESG roundup: MPs' Pension Fund, UKSIF, Sustainalytics, SynTao, Swiss scepticism

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  • ESG roundup: MPs' Pension Fund, UKSIF, Sustainalytics, SynTao, Swiss scepticism

EUROPE - The UK Sustainable Investment and Finance Association (UKSIF) and Green Party MP Caroline Lucas have called on the Parliamentary Contributory Pension Fund (PCPF) to commit to the UK Stewardship Code.

The voluntary code aims to enhance engagement between institutional investors and companies to help improve long-term returns to shareholders and ensure good corporate governance.

But the PCPF has not made a public commitment to the Code since its publication in July 2010.

UKSIF and Lucas have written to the chairman of the board of trustees of the PCPF Brian Donohoe, requesting a meeting to make the case for the fund's signature.

Lucas said: "Most people would be appalled if they thought their pensions were being invested in corporations with, for example, poor records on human rights or environmental protection.

"By signing the MP pension fund up to the UK Stewardship Code, Parliament can demonstrate its commitment to sustainability and transparency, and really lead by example in responsible investment."

There are currently approximately 250 signatories to the Stewardship Code, including public service pension schemes such as the London Pensions Fund Authority, the Environment Agency Active Pension Fund and the Pension Protection Fund.

In other news, Global responsible investment research firm Sustainalytics has entered a partnership with Beijing-based sustainability consultancy SynTao.

A central aspect of the partnership is the sharing of resources.

SynTao will share analysis of Chinese companies' ESG performance on the Sustainalytics Global Platform, enabling Sustainalytics' clients to improve their understanding of the market.

In working with Sustainalytics, SynTao can offer its clients guidance on global best practices and international standards for sustainability solutions and training.

The partnership with SynTao is the latest of Sustainalytics' corporate activities in the Asian market.

The firm recently acquired Singapore-based ESG research house Responsible Research.

Last year, the Sustainalytics also entered into a strategic partnership with SUSTINVEST of South Korea.
 
Lastly, strong scepticism is associated with ESG investments, a study by the University of St Gallen (HSG) in cooperation with Contrast Capital has revealed.

Entitled 'Sustainable Investments in Switzerland: An Empirical Analysis of Asset Owners and Asset Managers on the Current Acceptance, Perceptions and Barriers', the analysis found that a lack of proper information and education about ESG investments was a key driver behind the scepticism.

Other key findings include the following:

• Uncertainty over how to measure companies or funds' actual ESG impact cause aversion to adopt such investment strategies.

• There is no stakeholder pressure - for example, from the media, regulators, NGOs - as yet in Switzerland to adopt ESG investment approaches.

• Pension funds are long-term investors, and they face the need to re-allocate their portfolio in the face of economic challenges. Currently, several pension funds critically review new investment approaches with a risk management focus.

Pierin Menzli, co-founder at Contrast Capital said: "Asset owners and asset managers in Switzerland are generally overwhelmed with daily operational challenges, and ESG investments take a low priority - even more in today's current economic and financial crisis.

"During the interviews we carried out in this research, it became clear the traditional investment consultants have a strong role and influence in Switzerland. In most cases, they are not knowledgeable and experienced enough to have an independent view on the emerging sustainable investing landscape.

"As a consequence, the more-of-the-same-approach is the allegedly least risky approach but the one that leaves out ESG risks that could substantially impact the future risk-return profile of their clients' investments."

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