PLSA Richard Butcher is chair of the PLSA THE GHOST IN THE MACHINE?


One of the Pensions and Lifetime Savings Association’s (PLSA) key policy priorities this year has been Investing for Good. Within that framework, I’ve been working on a climate investing project; and when I say working, I mean the team do most of the work, whereas I simply chair the meetings and shout ill-informed edits from the side lines. At the time of writing, we’ve held 10 roundtable debates, with more than 80 delegates attending, representing some 60 funds directly and 100s indirectly. It’s produced a great and robust body of evi- dence that will inform our output over the rest of the year and beyond.


In this article, though, I want to talk about just one aspect of these roundtables. One of the striking features of the dele- gates was that they represented every part of the pension investment chain; from asset owners like me, a professional trus- tee in my day job, through to advisers and providers, including asset managers right down to the investable assets themselves. We had several meetings with the treas- ury and other functions of the companies we invest in or lend money to, to find out how they were dealing with the demands of being invested in for good. And the feedback from all 80 of these people was they want to do good, in the sense that they want to invest in a way that takes account of the impact of climate change on the value of the companies in which they invest. We didn’t quite have universal buy-in to the climate crisis as we had one ‘climate change denier’. Yet even he agreed with the rest of us on the principle that we should invest to mitigate climate change as a risk – albeit he thought it a risk unlikely to manifest. In other words, we had a universal and overwhelming agreement to the need to invest in a climate aware way. This led me to two things. Firstly, and most importantly, a sense that we will achieve our mission. We will pre- vail. If we have a universal appetite to do good, there is nothing that will stop us


from doing good. This gives me great strength.


The second was the realisation that the investment chain is unfairly presented. There is no ghost in the machine trying to block the progress of investing for good, motivated, perhaps, by a misaligned incentive or pecuniary interest. There is no ghost in the machine trying to exploit an imagined opportunity to steel a leap on their competitors. There is no ghost in the machine that sees climate change or the risk of climate change as a conspiracy the- ory that it is their duty to thwart. There are no ghosts in the machine. Now that’s not to say there aren’t systemic challenges that slow or can even halt pro- gress, there are, but where there are they are caused by “cock up not conspiracy” – the accidental but benign development of different systems and processes over time.


If we ask for a bit of data, the inability to provide it is not an attempt to thwart us, but simply because no one has ever asked for or collected that bit of data and so the system cannot provide it. These things, though, can be worked through with time – if you want evidence of this look no fur- ther than the asset managers’ response to data requests using the new Cost Trans- parency Initiative templates – particularly with the overwhelming will to do good. We can do this. I am hopeful. You’ll see our output soon, but one last thought. At the risk of bringing you down from the high the previous paragraphs will have hopefully induced – there are other challenges and the most significant of these are out of the pension investment chain. Our biggest challenge will be influ- encing others to change as much as we must ourselves.


Issue 97 | October 2020 | portfolio institutional | 23


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