bility to offer individuals a diverse set of assets. To the point on local authorities, if a pension scheme decides to be ‘green’ and the returns are not there yet, then the constit- uents of that authority will have to pick up the tab. That is not necessarily a bad thing, but it comes with risk. This risk may or may not be something that is acceptable to corporate schemes. Change brings opportunities, but from a trustee’s point of view, you are highlighting how difficult our position is to make rational decisions. MacArthur: You raise a fair point on the patchwork quilt of reg- ulation in the EU along with the FCA developing their own ver- sion of the taxonomy. Navigating these acronyms can be confusing even for profes- sionals, and I am concerned about the implications for middle market asset managers.
If you are a sustainability boutique, you can pivot quickly onto the new reporting requirements at speed. By contrast, if you are a bulge bracket manager, you may have millions of pounds to invest in data per year. The middle ground of the market may struggle and I am cautious about the unintended compet- itive effects of this regulatory patchwork. Llewellyn-Waters: Are clients enquiring about transitioning portfolios?
MacArthur: The enquiries are increasing and flowing through the investment value chain, and rightly so. Interestingly, I spoke to one investor recently who said his most aggressive hiring was in the request for proposal team to address all the ESG questionnaires they receive. From a consultant perspective, there are choices to make about streamlining and focus and whether the questions we ask are value added and get the clarity needed rather than adding to the acronym zoo. Llewellyn-Waters: Could we talk about physical risk? A net-zero economy supports a 1.5oC scenario and a 1.5oC scenario is a warming scenario which requires adaptation. The next frontier, aside from biodiversity, will be climate resil- ience, or physical asset risk, and how we think about that in our portfolio will be increasingly material because we are com- mitting to a warming world. It is hard to slow that warming down, but it is still warming and we need adaptation.
Is the quality of data improving? Burger: The reliance and consistency of data is becoming more of an issue. We took a portfolio and mapped it against three methodologies. One came out at 1.5oC, one at 2.5oC and one at 4oC. That is not healthy.
We need a smooth decarbonisation rather than a rapid shift
towards net zero. Gustave Loriot-Boserup, London CIV
20 Feb 2022 portfolio institutional roundtable: Sustainable investing
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32
