What does sustainable ownership mean to institutional investors?


Chandra Gopinathan: Sustainable ownership is not new. It has been discussed since the 1990s, when it was known as corpo- rate social responsibility. That has since evolved into a main- stream investing strategy. For us, it is about universal ownership. As asset owners we own a slice of the world that our members will retire in, so we have a responsibility to be effective owners to create a better future for our members. Gustave Loriot-Boserup: We use ownership in companies to drive strategic outcomes. Active ownership is one of our most effec- tive mechanisms to reduce risks, maximise returns and have a positive impact on society and the environment. Divestment alone, would leave us with no voice, no potential to help drive responsible corporate practices or add value for our clients. We have all seen a flurry of net-zero commitments in the past 12 months and sustainable ownership will be a key lever to reduce carbon emissions in the real economy. Simon Rawson: It is great that institutional investors managing $130trn (£96trn) are committed to a low carbon future, but in the next few years we will find out how that will be implemented. Active ownership will be critical.


Is promoting responsible investing in the current environment as easy as it sounds? Rawson: ShareAction grew out of a movement 15 years ago that was calling on the Universities Superannuation Scheme to divest from fossil fuels. We talked then about creating a move- ment for responsible investment. Today it is not a question of asking people to make commitments but about the quality of those commitments, if there are credible plans to deliver them and holding organisations to account when they don’t. So, we are not packing up yet. Ian Burger: The responsible investment industry has been through a significant number of inflection points over the past 20 years, which is why Newton has remained in the space. Arguably, this is the longest and most severe inflection point of those 20 years.


The opportunity is there and we should harness it while recog- nising that being responsible asset owners means taking the relationship we have with companies seriously. A lot of us do. But there is a lot of greenwashing going on. It is for us, as investors, to demonstrate that we are doing what we say we are, which is critical as regulation evolves, particularly over the next 18 months.


How are asset owners making sure their managers are taking responsible investing seriously? Andrew Cole: With great difficulty. I have yet to hear a presenta-


8 Feb 2022 portfolio institutional roundtable: Sustainable investing


The next frontier, aside from biodiversity, will be climate resilience, or physical asset risk, and how we think about that in our portfolio will be


increasing material. Abbie Llewellyn-Waters, Jupiter Asset Management


tion from an asset manager where they are not the best at everything. Trustees are not necessarily investment experts, so it is difficult. There are organisations that can help us clarify what asset man- agers or funds are doing as there is a lot of talk out there: some- times there is action and sometimes, to be frank, there isn’t. I look at it with a degree of cynicism. That does not mean people are not making huge strides forward, but it is difficult for pension schemes to understand, especially with the time they have to delve into the details. So, it is critical that there are rating agencies for fund managers in this space to give us more clarity. Henrietta Gourlay: It is important to understand what the under- lying manager is thinking. We have managers who are not going to be Article 8 [promoting environmental and social aspects of investments] because they are not sure what it means, whereas other managers are Article 8 in everything.


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