ments in charge of planning development on a four-year cycle. We need to address this tenure tension with the actionability of the plans we look after.
The only way to do that is to deliver short, medium and long-term targets. Those in the position of stewardship, whether it is a dem- ocratically elected position, a corporate position or a material risk taking position, the accountability of the investee companies will be crucial to deliver against these multi-decade strategies. Rawson: How about tying long-term incentives to long-term performance? I would like to get out of this cycle of being fixat- ed on the short term. Gopinathan: That will not ensure short-term targets will be met. The issue is the short-term needs to drive the long term. How do you ensure there is delivery around the short and medium targets to keep the long-term on track? Loriot-Boserup: On the topic of renewable energy and the trade off with other sources, such as natural gas, what are your thoughts on the EU Taxonomy and the integration of natural gas and nuclear energy?
In the initial draft, these energy sources were technology ag- nostic in that to be compliant with the taxonomy you needed a carbon footprint of under 100g per kilowatt hour. There has been a lot of push back from some countries for the integration of natural gas as an EU Taxonomy compliant industry. Rawson: It is a political outcome. I am more interested if gas and nuclear will be allowed within the UK equivalent of the EU Taxonomy. Llewellyn-Waters: The IEA has said they are part of the solution. We are mindful there is a political element to the taxonomy accreditation. Cole: This debate is interesting because it shows how compli- cated this is for trustees. We have a fiduciary responsibility and have to engage with our members, but the reality is that at least in the defined benefit schemes I am involved with, no individ- ual has yet asked where we stand on ESG. That is probably a function of the age group, which is slightly older. For defined contribution schemes, which have younger mem- bers, it is particularly important in terms of fiduciary responsi-
Feb 2022 portfolio institutional roundtable: Sustainable investing
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