Whilst asset owners’ approach to ESG has been slowly shaped by regulatory and best practice influences over time, we have now reached the point that inaction on the topic is no longer possible, according to Sarah Wilson, Minerva’s Chief Executive. 

At Minerva’s recent ESG Educational Event in London, Sarah addressed the topic of ‘ESGvolution’, looking at ESG’s origins, and looked specifically at the changing face of responsible investment behaviour over time. 

Whilst ESG is the current hot investment topic/theme/concept, some UK investors from different parts of the investment spectrum – public sector pension funds, private sector pension funds and investment managers – have been working hard to embrace good stewardship practices for many years without any meaningful recognition. 

Recent regulatory changes in the UK – specifically relating to SRDII and DWP Occupational Pension Scheme Regulations 2018 – have, finally, brought things to a head. Whilst there is a concern that some asset owners might resist the increased stewardship pressures brought on by SRDII and DWP – and according to recent news from the Society of Pension Professionals (SPP) some are slow off the mark in responding – the significant external factor of Climate Change has brought its own impetus to the discussion. As a result, there is a growing realisation that asset stewards are fundamental to bringing about sustainable investment practices in companies across the globe, and need to act, decisively and quickly. 

Sarah highlighted the challenges to decisive action, the main one being linked to asset owners’ ‘Governance Budgets’. For pension schemes, both public and private, the time set aside by Trustees to govern their scheme is limited. Typically, Pensions Trustee committees meet 4 times a year, for 1 or 2 hours at a time. As a result, there is significant time pressure on carrying out the day-to-day business of managing the scheme properly.  

Sarah was of the view that establishing, implementing and monitoring the impact of ESG and Climate Change beliefs on a scheme’s investment strategy (and ensuring these beliefs are reflected in the way their investment managers invest on their behalf) is the most important action asset stewards are likely to ever take for their scheme. As a result, dedicated meetings should be held to deal with this subject, and this subject alone, to ensure the best possible outcome can be achieved through informed discussion and debate that is not time-bound. 

For more information on how Minerva is helping asset stewards get to grips with their new ESG responsibilities, and stay up-to-date on latest developments, say hello@minerva.info 

Last Updated: 4 February 2020