Pension fund executives have called on other asset owners to remember they have the power to put pressure on money managers to take environmental, social and governance integration seriously.
Speaking at a panel discussion on sustainability at the World Pensions Council investment forum Thursday, Mark Thompson, chief investment officer of the HSBC Pension Scheme, London, said that even if asset owners are smaller in size, they still have the ability to change their managers should the managers be reluctant to implement ESG policies.
Responding to fellow panelist Janice Turner, chairwoman of the Association of Member Nominated Trustees, who pointed out that trustees of smaller plans often encounter managers' unwillingness to change or take ESG into account, Mr. Thompson said: “If your money managers won't do it, there are other managers out there who would.”
Philippe Desfosses, CEO of the €26 billion ($27.6 billion) Etablissement de Retraite Additionnelle de la Fonction Publique, Paris, said the key to understanding ESG is not to think of it as a diversification tool, “but that a pension fund's approach should be global as many companies have global supply chains,” he said.
Catherine Howarth, chief executive at shareholder activist group ShareAction, agreed and added that ESG goes as far as making sure that the companies in a portfolio not only have no carbon intensive operations, but also that they are not lobbying for a delay to bringing ESG into the financial system.