The Covid crisis has been a true test of ESG’s risk- mitigating credentials. David Czupryna, Candriam


PI: What issues are ShareAction promoting at the moment? Lauren Peacock: The crisis is causing transparency issues in that a lot of companies are not holding public AGMs. It is a risk if stake- holders and shareholders cannot go to public AGMs and ask the board questions. Public accountability is crucial, so we have been working on that.


PI: What conversations are asset owners having with their manag- ers on ESG? Kate Brett: The change in regulation last year means that schemes must publish statements to let members know how they have implemented their ESG policies.


This has led to conversations with managers around implement- ing ESG more broadly, but also on engagement, stewardship and monitoring in terms of impact measurement. We have clients that want financial performance and impact met- rics, aligned with the Sustainable Development Goals in some cases. So there is a broad range of conversation across the asset owner space.


A couple of key trends are around asset owners looking for much more consistent data and monitoring, specifically on climate met- rics. The government has indicated that the Task Force on Cli- mate-related Financial Disclosures’ recommendations will become mandatory for pension funds.


A lot of asset owners are putting things in place now. So, we are having a lot of conversations around what the most suitable met- rics they should be looking at from a climate change perspective are.


that manager’s benchmark. We use the poor scoring companies in the portfolio to guide our discussions with managers as well as reporting to the investment committee. From the portfolio level, through to our asset managers and indi- vidual securities we report on our screening and voting practices. It is integrated across everything we do as we try to have joined up thinking in relation to ESG investing.


PI: How are Candriam’s ESG strategies performing? David Czupryna: They are performing very well. The Covid crisis has been a true test of ESG’s risk-mitigating credentials. For a long time we have been advocating the integration of ESG into investment decision making, not only focusing on the envi- ronmental dimension, but the social and governance dimensions are also of paramount importance and can impact a company’s performance over the medium to long term. This is what we are seeing today. Since we have integrated these dimensions in our strategies, in all there are €40bn (£35.8bn) of funds with deep ESG integration, we were well positioned going into this crisis to resist, on a relative basis, a downturn. Performance relative to our peers is pretty good.


PI: This meeting, like many others around world, is taking place over the internet thanks to the lockdown. The press reports that this has led to an increase in hacking, so is cybersecurity a concern for investors? Uku: We are concerned about it from an operational point of view, but on a portfolio basis it is not something we have thought about yet.


PI: So is cyber risk important to asset owners? Bhatia: It is part of a broad range of risk considerations that we cover as part of our operational due diligence. It is not something that has become important because of the current pandemic. It is something that has been integrated into our operational due dili- gence from day one.


As investors, we are quite nimble compared to many other institu- tions in that we are active in the venture capital space, we are sup- porting the technology sector. What this crisis is beginning to show, if it was not the case before, is that in the UK, and certainly globally, there is a buzzing tech start-up community that is finding ways of adapting quickly. There is a lot of innovation. It is unfortunate that the venture space is underfunded. We sup-


May 2020 portfolio institutional roundtable: ESG 9


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