June 2022

Could ESG improve scheme engagement?

Industry Voice: A major survey carried out by Aegon shows pension savers care deeply about climate change and the environment Aegon's recent survey of around 10,000 UK residents shows that most pension investors care deeply about the environment and their world's future. It also suggests that the more someone's investments are helping the climate emergency, the more likely they are to be happy about their investments and be better engaged with their pension arrangements. But too many customers remain unaware...

Greening Pensions: A Behavioural Perspective

By Alice Farrell, Kristina Londakova, Izzy Brennan, Jake Reynolds & Toby Park Through their pensions, the vast majority of people in the UK are investors, with pension pots collectively amounting to over £2.6 trillion.1 Investing a greater portion of this money sustainably - i.e. in businesses who have positive or neutral impacts on the environment and green technologies – could significantly accelerate our transition to a low-carbon society. While 68% of people say they would like their investments to be responsible...

New UK trial seeks to ‘nudge’ people into making greener pension choices

A new trial to encourage people to learn more about making greener pension choices in the UK has been launched. Dubbed the ‘Green Nudge’, the trial will test the impact of behavioural nudges and messages on increasing saver engagement with the sustainability of pension investments and how it could translate into greener pension decision-making. The Department for Work and Pensions (DWP) is working in partnership with the Behavioural Insights Team (BIT), Aviva, Smart Pension and Hargreaves Lansdown to deliver the “nudges”...

US. BlackRock offers feedback to SEC on climate-risk disclosure proposal

BlackRock, which embraces climate-conscious investing and is pushing other companies to do the same, still supports the rules proposed by the SEC requiring climate-related disclosures from public companies. But the money manager has some notes for the regulator. In a June 17 letter to the SEC, BlackRock reiterated its belief that "climate risk is investment risk" and that related disclosures aligned with the Task Force on Climate-related Financial Disclosures framework should be mandated. However, the firm does not agree with...

LGBT CEOs and stock returns: Diagnosing rainbow ceilings and cliffs

By Savva Shanaev, Arina Skorochodova & Mikhail Vasenin This study is the first to investigate the implications of lesbian, gay, bisexual, and transgender chief executive officers (LGBT CEOs) for stock performance, using an exhaustive sample of 26 LGBT publicly listed company CEOs since 2000 to document statistically and economically significant financial outperformance of LGBT-led firms. Stocks of companies with openly LGBT CEOs generate a monthly alpha of 0.69%-1.08%, robust to portfolio weighting schemes, estimation frequency, multi-factor asset-pricing models, factor multicollinearity,...

US. DC plan participants prioritizing returns over principles

Increased interest in incorporating ESG principles in defined contribution retirement plans, leveraging collective investment trusts (CITs) and offering financial wellness tools as a value-add are some of the latest trends on the minds of consultants and advisors, according to T. Rowe Price’s 2021 Defined Contribution Research Study conducted in partnership with Schaus Group. Michael Davis, T. Rowe Price’s head of defined contribution plan specialists, told Benefits PRO that the survey responses from 32 consultant and advisory firms jibes well with...

Pension funds criticize Toyota for anti-green lobbying

Pension funds in Denmark and New York City expressed their dissatisfaction with Toyota Motor Co. Wednesday over what they see as lobbying activity that is slowing down a green transition. "We are extremely concerned that Toyota's lobbying activities are misaligned with its climate goals and its electric vehicle strategy," New York City Comptroller Brad Lander, fiduciary of the $265.9 billion New York City Retirement Systems, said in an emailed statement before the car maker's annual shareholder meeting Wednesday. "Toyota's approach puts...

Five metrics to help investors point their investments toward impact

Do you come from the financial sector? Do you have a genuine interest in impact? Did your firm put you in charge of a small fund and ask you to explore impact investing, hoping you would learn and figure things out along the way? If you feel confident in your ability to make good financial decisions – but wish you had had a chance to develop an instinct for impact honed by years of interaction with impact organizations –...

Investors put new weight behind ESG mandates

Institutional investors have focused on ESG for many years, but the industry may be reaching a tipping point in terms of the specificity and sophistication of ESG mandates. Against a backdrop of increasingly hard to ignore climate risks and social unrest brought on by the Covid-19 pandemic, the death of George Floyd and the war on Ukraine, institutions are moving away from passive exclusion strategies and leveraging new data to engage with management teams, set specific goals and measure...

Reporting on a Greener Future

By Maggie Williams As climate change and ESG stewardship become a central part of pension schemes’ investment strategy, identifying suitable performance measures and devising frameworks to report on them has also risen in importance. The Pensions Regulator and Department for Work and Pensions now requires schemes to use the Task Force on Climate-Related Disclosures framework (TCFD) to report on their portfolios – and from April 2022, large companies in the UK will also be subject to mandatory climate risk reporting, based...