Now Pensions – Industry view
Will Martindale is head of sustainability at Now Pensions
INVESTING RESPONSIBLY IS… INVESTING
At Now Pensions, our approach to sus- tainability enables us to contribute to our objectives and identify financially materi- al issues in investment decision-making. We consider a range of sustainability top- ics in the construction on our investment portfolio and the companies in which we invest, with a particular focus on climate action, living wages and gender equality. We believe these three issues are finan- cially material to our investments and important to our members. For example, on gender equality, we believe companies that take steps towards addressing imbalances will: – Secure a more engaged and diverse workforce, employee retention, and human capital management, leading to better decision-making amongst senior management
– Be less exposed to reputational issues, with increased client and customer loy- alty contributing to growth, competi- tiveness and productive capacity
– Be less exposed to regulatory interven- tion, such as maternity pay or gender pay gap reporting
To start addressing this, we believe it is crucial to stay invested, using the power we all hold as investors to influence com- panies and drive change from within. That said, in the same way we determine some investments as too risky irrespec- tive of performance, investors are becom- ing increasingly acute at judging the envi- ronmental and social impact of their investments in order to ensure they are not having a detrimental real-world impact. This is particularly true in the case of companies where there are sys- temic issues around climate change or in respect to human rights.
Task Force on Climate-Related Finan- cial Disclosures Report (TCFD) In 2022, we published our first TCFD report, setting out how we understand cli- mate change-related risks and opportuni- ties. Included in our report is our de-car- bonisation target, committing us to net zero greenhouse gas emissions by 2050, with a 50% emission reduction by 2030, based on 2019 levels. Building on this and to best understand our members’ views on sustainability top- ics, we have also pledged to host focus groups and we’ll report the findings of this work in our 2023 TCFD report. This year’s reporting will also include an align- ment metric, tracking the extent to which our portfolio is aligned with the Paris Cli- mate Agreement.
Our commitment informs our invest- ment activities. We have increased our investments in green, social and sustaina- ble bonds and invested in equity compa- nies which, on average, produce lower greenhouse gas emissions.
As investors, we have a critical role in using our influence to drive change. Investors must play a key role in influenc- ing the companies they invest in through active engagement and dialogue, directly and through investment managers. We routinely engage with companies, govern- ments, stakeholders and third-party asset managers to address sustainability-related risks and opportunities.
Along with our investment manager, Cardano, we have met with companies such as Sainsbury’s, Amazon and Tesla to talk proactively about the future direction of sustainability in their businesses. Across the industry, we are seeing action on sustainability topics. Norway’s sover- eign wealth fund, one of the world’s larg- est investors, has warned company direc- tors it will vote against their re-election to the board if they did not show a clear enough commitment to tackling the cli- mate crisis, human rights abuses and boardroom diversity.
In the year ahead, we expect sustainability issues to continue to draw attention within the investment community. The FCA’s consultation on sustainability disclosure requirements and the propos- als set out by the transition pathways task- force are a welcome move. It raises mini- mum standards, levels the playing field and can increase efficiency as we work to coalesce around universal terminology and methodologies. Indeed, as long as capital markets remain unsustainable, further policymaking is inevitable. Sustainability is at the top of our agenda and must be for the investment commu- nity. At Now Pensions we are committed to change, now and long into the future.
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ISSN: 2045-3833 Issue 121 | March 2023 | portfolio institutional | 11
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