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Governance

Money managers told to focus long term not quarter to quarter – CFA Institute

Asset owners called on money managers to focus on long-term investing and not chase quarterly results, delegates heard Monday at the at CFA Institute's annual conference in London.

During a panel discussion, speakers agreed the money management industry is too focused on short-term financial performance instead of long-term sustainable investing. Angelien Kemna, non-executive director and member of audit committee at AXA Group and former CIO of APG Asset Management, said: "We need to (show to) asset managers this is really what we want. We don't want you to chase quarterly results."

Other speakers said that even plan sponsors in declining industries such as the mining industry could still adapt investing in the transition to low-carbon economy. Mark Walker, CIO of the 21 billion ($27 billion) Coal Pension Trustees Services, Sheffield, England, which manages the assets of the Mineworkers' Pension Scheme and the British Coal Staff Superannuation Scheme, called on managers to recognize that "there is still lots of things that could be done," even by those who aren't calling for a move away from carbon-based energy.

Mr. Walker said there is a lot of focus on lowering the carbon exposure in the fund's portfolio, but he pointed out: "the 'S' and 'G' in carbon is so much more important than the 'E.' "

Noting the circumstance of his own funds and liabilities of CPTS' two closed defined benefit plans estimated at 1.2 billion in 2030, Mr. Walker said: "Our time horizon remains long. We think about how ESG can enhance the return."

However, speakers said asset owners question the level of response from managers, and to some extent some of them have been moving assets and proxy activities in-house to address these concerns.

"Our view when expressed to the managers is lost," said Emma Howard Boyd, chair of the Environment Agency.

"(So) we are engaging with energy producers. We want to attend annual general meetings to (speak) directly to the chairmen. We want to (see) them take responsibility," Ms. Boyd said.

Alison Tarditi, CIO of the Commonwealth Superannuation Corp., Canberra, Australia, said for the first time the world has moved from cyclical issues to existential issues with themes such as cybersecurity and carbon transition. "We have moved to a world where intangible is what matters," she said.

But she warned, "There is a leadership gap at investment houses."

Ms. Kemna noted that sustainable investing is quite different to what portfolio managers have learned, adding that more different education was needed in the form of "add-ins."

"Measurement is important. What gets measured, gets done," she said, adding that although full integration of ESG into a portfolio is not easy, "now we have a momentum."

Mr. Walker concurred that he'd like money managers to do more. "I'd like to see an investment in leaders," he said.