where there is standardisation, quality and usability assurance on data and then progress to create scores and products. That may take a long time. That is why there is so much talk around regulation. Regula- tion and licensing allow for standardisation and assurance around data, methodology and skillsets.
Standardised and independently verified disclosure along with transparent and verifiable assessment methodologies is the credible way forward. Campbell: The E element is the part of ESG data that we have most confidence in. We do see the highest correlation across providers, albeit sometimes the highest correlation could mean that they were all making the same mistake in the same way. But at least the methodologies are clear. Jackson: At the end of last year, we launched a passive fund that uses an ESG data index called the LCIV Passive Equity Progressive Paris Aligned Fund. Our responsible investment team felt that the particular index selected incorporated the most data on climate-themed objectives such as Paris align-
ment, carbon emissions and fossil fuel exposure. These types of themes are much easier to quantify in an index than other Sustainable Development Goals, targets which have been used in other indices. McAllister: We also struggle with the need to supply evidence. Data is the way that people like to see that, but when you are investing you care about the future and what the company is going to deliver. That is hard to boil down into a piece of data. And it is the forward-looking piece about what the company is going to do and what capital expenditure will be focused on, rather than performance, which is backwards looking, that will be a struggle to codify into a score. Logan: We all agree that making comparisons is difficult. But useful research is being done and when a company is flagged as poor we can look into why, then speak to the manager to understand their view and challenge them.
The score in itself is not useful, but we do use the underly- ing research behind it to have those conversations. That for us is useful.
October 2022 portfolio institutional roundtable: Responsible investing
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