Pensions Aspects Magazine
15 September 2021
ESG engagement: going above and beyond investor letters
Over the past couple of decades, responsible investing has evolved from a niche area of our industry to much more mainstream. Engaging with companies on environmental, social and governance (ESG) issues is a huge part of what it means to be a responsible investor, because using our influence in this way can help drive real, positive change for people and the planet. We recently discussed ESG engagement with three of the companies we engage with to understand how they’ve witnessed engagement evolve and to get their opinions on what good engagement looks like.
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15 September 2021
Accessing alternative assets to build diverse portfolios
Assets under management in private markets have grown exponentially in recent years, hitting $4.74 trillion by the end of 2020*, and growth is set to continue on this trajectory**. It is a growing universe, but one which is out of reach for most investors, as assets are generally held in long-dated funds with no redemption rights and large minimum investment limits.
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15 September 2021
Gold – creating opportunities from risks
Any path to recovery is beset with challenges, something exemplified by financial markets’ performance so far this year. The first six months of 2021 saw swings in asset prices, sentiment and optimism as the global economy continued its quest for a much-needed recovery. Some say we are hitting an inflection point with growth, inflation and policy stimulus potentially peaking, but uncertainty remains high.
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15 September 2021
Accessing future cash flow to understand the journey plan
Ultimately, future cash flows of the sponsor pay pension contributions. A largely historical approach to covenant assessment, focused on past performance and the balance sheet, can misjudge the level of covenant support available or even misrepresent the risks that a scheme faces. A forward-looking approach is an essential part of a robust covenant assessment framework.
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15 September 2021
To what extent will an increased focus on ESG (Environmental, Social, and Governance) improve member outcomes?
Changes made in 2018 to the Occupational Pension Schemes (Investment) Regulations 2005 required that pension scheme trustees outline their ESG policy in their Statement of Investment Principles (‘SIP’). The European Union later introduced the Shareholder Rights Directive II which has necessitated further disclosures since October 2020¹. Pension schemes are not the only entities affected by ESG reporting as companies are required to make reports in accordance with the Taskforce for Climate Related Financial Disclosures (‘TCFD’). The Financial Reporting Council (‘FRC’) also recommends that public interest entities report against the disclosures of the Sustainability Accounting Standards Board (‘SASB’)². It is clear that there is an increased focus on ESG principles. Appropriately implemented, ESG policies can improve outcomes for members - both as employees and as pension scheme beneficiaries.
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16 July 2021
Pensions Aspects July/Aug 2021
Judgement day. Read the latest issue policy and challenges.
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