UK - Small pension schemes in the UK should not use their size as an excuse to not engage with companies on environmental, social and governance (ESG) issues, the chairman of the sustainable investment and finance association UKSIF has said.
Speaking to IPE ahead of today's launch for evidence from the Department of Business, Innovation and Skills' (BIS) Kay Review - which will examine the effect of UK equity markets on the competitiveness of domestic businesses - Martin Clarke also called for the government to lead by example, including a "sustainable tilt" in all its procurement procedures.
The Kay Review will consider several issues of interest to the UK pressure group, including the quality of engagement between fund managers and companies on behalf of institutional clients, as well as how government policies promote and encourage companies to focus on the long-term development of the business.
Clarke hailed the review as a "real opportunity" for debates to begin about key issues, saying that economist John Kay had stressed his interest in "evidence, rather than political rhetoric".
However, Clarke was critical of "excuses" made by smaller pension funds that they would be unable to engage with companies effectively due to their size.
"If you talked to investment managers, they would say they are driven solely by clients - which is perfectly true," he said, accepting that larger clients with more clout were in better positions.
"To a certain extent, it can also be seen as an excuse - 'well, we're not big enough to influence'," he said. "If enough small voices say the same thing, it will be as impactful."
He added that one issue UKSIF would hope to see addressed was the evolving investment landscape and how it is affecting the long-term prospects of investors - such as the "tremendous" environmental pressures facing many companies.
The chairman dismissed suggestions ESG engagement could not be measured in higher returns, saying there were equal numbers of surveys proving and disproving the hypothesis and that, in the end, it was "purely about risk".
Clarke also called on the government to be an "exponent of good practice" through its numerous public procurement contracts, saying that incorporating a sustainable tilt would allow it to show leadership in the field.