ESG industry view – Transparency Task Force
ing, there is a huge issue around data quality – much of it is little more than cor- porate
marketing spiel that pension
Andy Agathangelou is the founder of the Transparency Task Force. He is also the chair of the Violation Tracker UK Advisory Board and the secretariat committee to the APPG on Personal Banking and Fairer Financial Services
HOW PENSION TRUSTEES AND INVESTMENT MANAGERS CAN AVOID THE ESG DATA TRAP
Investors and pension savers are finding it increasingly unpalatable to put their money into companies that are failing to do a decent job when it comes to any aspect of ESG. That’s good news, but it does create policy and operational chal- lenges for pension scheme trustees and their investment managers.
Those challenges can be expressed by two questions: – Firstly, in terms of the policy challenge: “What is the right thing for our pen- sion scheme to do, in relation to select- ing companies we should and shouldn’t invest in?”
– Secondly, in terms of the operational challenge: “What data do we use to base our ESG-orientated selection deci- sions on?”
I am not going to dwell on the policy challenge question because there are so many subjective, scheme-specific factors to be considered that any necessarily generic commentary would not be of any practical use. However, I do think I have something of use in relation to the operational chal- lenge question, so here goes: There’s no problem finding sufficient quantities of ESG data because so many companies are now pushing it into the market. But because of the extent of greenwash-
scheme trustees and their investment managers cannot rely on for stock selec- tion decisions. That’s a worry for many reasons, including the possibility of a troublesome disconnect between pension schemes’ Statements of Investment Prin- ciples and what’s happening in practice. It’s anybody’s guess what future litigation there might be around that in decades to come. It’s for all these reasons that I rate Viola- tion Tracker UK so highly, and why I am proud to chair the Violation Tracker UK Advisory Board. Violation Tracker UK is a massive online database that offers a treasure chest of valuable, verifiable data that shows a wide range of regulatory infringements by all kinds of companies, throughout the UK. It’s a powerful research tool that tracks corporate mis- conduct. And thanks to donations by The Joffe Charitable Trust, The Joseph Rown- tree Charitable Trust and The Reva & David Logan Foundation, pension scheme trustees and their investment managers can use it for free. What’s not to like? All the hard work to bring the data together has been done for you – it’s been painstakingly assembled and made availa- ble in a remarkably easy-to-access and simple to search way. And the important point is that the data is trustworthy, with the original data source of each case being provided in just a few clicks. The data sources are typically regulatory announcements, court decision state- ments and so on. Trustees and investment professionals can search the data in many ways, including: – By company name, for example, BP, KPMG or Southern Water
– By offence group, for example, employ- ment infringements or environmental offences
– By regulator, for example, The Pen- sions Regulator
Issue 114 | June 2022 | portfolio institutional | 27
It’s not surprising, then, that Violation Tracker UK has won public statements of support from politicians, academics, thought leaders, investment profession- als and a range of stakeholders. The phrase “knowledge is power” certainly rings true when it comes to Vio- lation Tracker UK – you can think of it as “a transparency machine” or an “MRI scanner for poor corporate conduct” or an “ESG optimiser” or even an “anti-green- wash engine” – it has a multitude of uses and it’s set to play an important part in driving positive, progressive and purpose- ful corporate reform, especially if pension scheme trustees and investment profes- sionals take time to learn how to get the most out of it.
The database was compiled by a team of UK and US researchers led by the Corpo- rate Research Project of Good Jobs First – the Washington DC-based NGO founded in 1998. It’s a non-profit, non-partisan resource centre promoting government and corporate accountability.
If you would like to meet online some of the senior members of the team from Goods Jobs First, and be shown how to get the most out of Violation Tracker UK to help avoid the ESG data trap, get in touch:
andy.agathangelou@
transparencytaskforce.org
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