ESG – Feature
companies we invest,” he adds. “There has been a maturation of ESG knowledge and implementation from our clients.”
Digging deeper
There is scope for sustainability to have an extra boost by focusing on biodiversity.
Peter Mennie, Manulife Investment Management
Whatever happens with the pandemic and economy, the popu- larity of ESG-led investing will be strong, thanks, in part, to last year. “The events of 2020 will have an impact on ESG in 2021,” Zandbergen-Albers says. “People will stop and think about things more. Despite the pandemic, when it comes to climate, the awareness that we need to solve this issue became even bigger.” The main theme of 2020 was the social impact of Covid and the various protests witnessed around the globe. Momentum is strong, so it is likely to continue into this year, and it needs to. “Some institutes estimate that when it comes to achieving the Sustainable Development Goals that the Covid crisis set us back 10 years, while others say 60 years,” Zandbergen-Albers says. “So, we need to work hard to achieve these social topics. “Rising inequality and labour standards in supply chains were already issues, but Covid has put a spotlight on them,” Zand- bergen-Albers says. “Covid has made some things more important.”
Taking control Voting on pension funds’ equity holdings will be a new battle- ground this year, Manuel says. “If you invest in a pooled fund you have little choice around how the shares are voted,” he adds. “You have to follow the policy of the fund manager.” Attention has been drawn to this issue in recent years by the Association of Member Nominated Trustees (see page 33) and ShareAction. “This year we will see a battleground emerge around how to enable investors to exercise their own voting policies,” Manuel says. “That was bubbling beneath the surface in 2020, but this year there will be a big industry-wide discus- sion above the surface.” Guignard says that one of the focuses for his clients in the coming year will be how Amundi engages with the companies in which it invests. “More and more investors want to know how we vote at AGMs and how our dialogue influences compa- nies regarding ESG, this has been a strong commitment of Amundi for years.
“This is interesting in passive because usually when you invest passively you invest long term,” he adds. “As along as a company is in the index that you replicate you are invested in it. Therefore, the engagement you have with the company can influence that business.
“Investors are digging deeper into this topic and want to know understand our policies on voting and engagement in the
44 | portfolio institutional December–January 2021 | issue 99
One positive from the Covid pandemic, Mennie believes, was the international community pulling together. “There was a remarkable amount of effort put into developing vaccines for Covid. “We knew it would be extremely challenging to have a vaccine ready by the end of the year. Now we have three with high effi- cacy rates that have been approved or are close to it. “That is remarkable and shows that where there is a collective will to do something, there is the ability to do it,” Mennie adds. “The lesson is that if people are aware of sustainability issues there is an opportunity to create the push for them to be solved.”
Overall, the outlook for the year ahead is finely balanced, Men- nie says. “2020 was a tough year, especially on the debt side for governments and on the employment side for many people, but we have the political impetus with COP 26 coming up and evidence of the ability to act when we need to. It is going to be an interesting year.” Approaches to ESG were already maturing from why we should adopt such a strategy to how do we measure performance. The events of 2020 highlighted the benefits of following such strat- egies, but the hard work did not end when Big Ben chimed 12 on New Year’s Eve.
“2021 is when we have to get serious about sustainable invest- ing,” Zandbergen-Albers says. “We have to dive into the deep end. We have to dive into not only setting ambition on climate change but work out what they mean. This is what is needed in 2021.”
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