There is a wall of money available to invest in the build back better


political theme. Tom Sumpster, Phoenix Group


At the trustee level, a survey by Mercer 18 months ago found that ESG was considered a factor when making investment decisions by 89% of institutional investors in Europe. There is no upside in breaching ESG guidelines. You do not want to be the person responsible for investing in an oil com- pany if one of their platforms blows up. So, the financial sector is ahead of the curve compared to the population, governments and the industrial world. Everyone is behind. We have moved further and faster than expected.


I first noticed an ESG strategy being implemented in a pension fund nine years ago. Now I do not know a scheme that has not created at least an exclusion list, if not changed its entire investment strategy. Farquhar: It is not just what is in the investment portfolio, they look at the manager too. In the past two years I have not met a pension scheme that did not ask for clarity on a manager’s ESG credentials. Cambridge Associates is committed to net zero. We have made the pledge and are going to make that difference. We are walk- ing that talk and making sure client portfolios have that oppor- tunity to tilt. Yes, there is a transition risk but there are also huge opportunities. Sumpster: It is not just a one-off test. We see behavioural change


through certain performance indicators throughout the life of an investment. Halfon: We passed the one-off test stage before Covid, but since Covid the acceleration has been massive. Following COP21 in 2015, there were changes in the main min- ing countries. There have been legal changes in Australia, Can- ada and Chile, while the Netherlands is moving to impose pre- funding for nuclear operators. Rhodes: There is no value in investing in the status quo. It has to be sustainable. Part of a fiduciary duty is investing in things that not only give our members a return but also a world to retire into. We need to back things that are creating change and will benefit from those changes. It would be ludicrous not to look at what is required. Frith: I would take it above the ESG debate. Historically, local government pension schemes have made only a few invest- ments in local infrastructure. There is a conflict of interest if elected officials ask their pension scheme for money to build pet projects in their backyard. If Andy Burnham, for example, wants new trams in Manches- ter, instead of going to the Greater Manchester Pension Fund he should go to the UK Infrastructure Bank and put it on ten- der. He could open-up the whole system.


Dec-Jan 2022 portfolio institutional roundtable: Build Back Better 11


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