Railpen – ESG interview
The third part is policymaking. We are collaborative in policy initiatives, on things like climate market assessments.
Are you on track? We are on track. We are discovering new things and challenges do arise, relating to asset class, data and policy. So, we make sure the process is robust. While it is go- ing well, there is always room to improve.
What challenges are you facing? There are challenges from an ecological innovation perspective. There are tech- nologies that are untested. While they are offering a lot of promise, there are also questions of scalability. The second set of challenges relates to the asset classes. We have asset class considerations like public equities where you have a say, there is an accountability mechanism. When you look at other asset classes like bonds and private markets, there is not the same mechanism in place. So how do you make sure you have a voice at the table? How do make
sure transferred? those mechanisms are
You use a milestone-based approach when assessing a company from an ESG per- spective. How does that work? Climate change offers a good example. It is a set of criteria on which to assess a company on its climate credentials. By setting milestones, you increase the bar as it relates to governance, data capabili- ties, emissions and disclosures on de-car- bonisation, social impact and the just transition.
These are the pillars around which we set
milestones for a company. As time goes by, the milestone bar gets higher, as we expect the company to move forward.
Has this led you to divest from a company? We have not reached that point yet. We work through our engagements and give a clear window of time to see how much change can be effectively made by a company.
As a pension fund we see ourselves as real asset and universal owners.
On divestment as an approach, we use exclusions as a policy across the ESG space. We exclude companies that are extremely negative from climate and ESG perspectives. That is in some ways a form of divest- ment, but we believe engaging with a company can lead to better results than divesting.
Why do you believe collaboration is the best way to address change?
It is not the only way to address change, but it is an important part. There is, from an asset-owner perspective, a benefit to collaborating in terms of the universal duties that exist, especially within ESG.
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