PI Partnership – PLSA


artnership – BlackRock


Addressing poor-quality climate data and information


The PLSA will encourage a move towards more widespread adoption of the TCFD recommendations and support measures to increase equivalence of climate report- ing or regulatory obligations from the top to the bottom of the investment chain.


Joe Dabrowski is the deputy director of policy at the PLSA


COMMUNICATING THE NEED FOR CLIMATE-AWARE INVESTING


Climate change and climate-aware invest- ing remain hot topics as we move into the mid-point of 2021. Fortunately, we now see more people will- ing to talk about the sometimes uncom- fortable truth that significant changes across society and business are needed. And there is a growing acceptance that we can all play our part in helping address the issue. The PLSA continues to hold a key role in facilitating


those conversations in the


pensions sector, sharing best practice and finding solutions to the tough questions, as we’ll showcase at the new PLSA ESG Conference that starts in June. Our Changing Climate report – published last year – drew on discussions with more than 80 pension industry representatives and demonstrated the near universal desire among pension funds to invest in a climate-aware way.


The research identified seven barriers the industry faces and the ways the PLSA is helping to overcome these constraints.


Clarifying definitions of climate-aware investment


The PLSA recommends a joint-indus- try/government review to examine the wide range of competing standards, def- initions and existing initiatives, and to identify a framework to achieve a com- mon language and taxonomy ahead of COP26.


42 | portfolio institutional | May 2021 | issue 103


Delivering greater climate expertise and education


The PLSA will encourage more industry- led ESG training and education, work with TPR to ensure scheme guidance is suitable, and support the FCA to design explicit climate conduct expectations.


Articulating requirements more explicitly


The PLSA will work with the International Corporate Governance Network to revise and renew its model mandate and pro- duce guidance, templates and best prac- tice for members and trustees.


Enabling better climate stewardship The PLSA will develop its guidance for members on good practice expectations for stewardship services, continue to encourage adoption of the Stewardship Code, and play a proactive role in industry stewardship groups. It also commits to looking for solutions to the challenges schemes face when exercising steward- ship and voting ‘rights’ in pooled funds.


Improving supply of appropriate cli- mate ‘products’


The PLSA will continue to make the case for the issuance of a green gilt by the UK government and work with the industry and regulators to develop principles for ESG asset management funds/products on ESG generally, or specifically with regard to climate.


Communicating and explaining cli- mate-aware investment The PLSA will explore the feasibility of creating a Pension Quality Mark for ESG


and build on our work on implementa- tion statements to consider how best to support members in their communica- tions with beneficiaries.


That last point about communication remains key. It’s clear that businesses, investment managers and pension funds will be expected to do more to demon- strate their impact, ranging from proving that their operations are not damaging the environment, to showing through their words and actions that pension con- tributions are ‘doing good’. More than eight out of 10 people of more than 2,000 adults surveyed by the PLSA think global warming will be a serious problem for the UK if action is not taken and, currently, there is a lack of awareness about the extent to which pension funds are working to reduce the impact of cli- mate change.


In the same survey, 80% replied that global warming is an important issue to them and around half said it is “extremely” or “very” important to them. It’s therefore important that employers better communicate to their employees about how they are investing their money in a climate-aware manner, where they are investing, and the impact of their stewardship activities.


Engaging with people not only demon- strates that the contributions a business or pension fund make on their behalf are ‘doing good’, but also encourages employ- ees to engage more with their pension. By telling that story we are helping ensure climate-aware investing remains at the heart of good business practice.


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