Cover story – Responsible investing & Covid THE PANEL
Richard Tomlinson has managed all invest- ment and client activity at LPP Investments since 2017. He has specialised in portfolio construction, risk management and alternative investments for around 20 years and has Albourne Partners, Old Mutual Asset Managers and GNI Fund Management on his CV.
Richard Tomlinson Chief investment officer Local Pensions Partnership
Helen Price leads on stewardship, engage- ment and voting at Brunel Pension Partner- ship. She joined the pool from Avon Pension Fund, where she led the implementation of its first climate change analysis.
Helen Price
Stewardship manager Brunel Pension Partnership
Aaron Pinnock leads on impact investing for the Church of England’s £8.7bn endowment fund. This involves identifying investments as well as managing and measuring the impact of the portfolio, which focuses on the fund’s alignment to its 2050 net-zero goal. Prior to this he was a consultant at PwC, spe- cialising in sustainable and impact investing.
Aaron Pinnock
Impact investment analyst Church Commissioners for England
Danyal Sattar Chief executive Big Issue Invest
Danyal Sattar brought a 25-year track record of social and ethical investing to direct impact funder Big Issue Invest when he joined as chief executive at the end of 2018. He quit as head of social investment at the Joseph Rowntree Foundation to take the role. His experience of social investment stretches across Big Society Capital, the Access Foun- dation for Social Investment, the Esmée Fair- bairn Foundation, Charity Bank and the UK Sustainable Investment & Finance Association among others.
Matthew Cox joined the Esmée Fairbairn Foundation in 2013 where he oversees the investment portfolio and leads on responsible investing. Cox brought 15 years of investment experience to the foundation having previously worked as a portfolio manager and analyst.
Matthew Cox Investment director Esmée Fairbairn Foundation
26 | portfolio institutional October 2020 | issue 97
Performance How ethical, responsible investing (RI) and ESG strategies per- form is a question that managers have had to answer many times. Institutional investors must make a financial return, either to pay pensions or to re-invest in good causes. It’s why they exist. The Esmée Fairbairn Foundation has seen the value of its investments rise this year, despite the economic conditions. “Bizarrely, our portfolios are at a higher level than they were on 1 January,” says investment director Matthew Cox. “It does not make sense when you look at the deterioration in the real economy.” This he puts down to screening biases when picking sustaina- ble stocks. “Huge tech stocks dominating the S&P are disguis- ing what is going on with headline indices,” he adds. “When you construct a responsible investment or ESG-focused portfo- lio there is a danger that you end up overweight in healthcare and technology, because they are sectors that often screen well in terms of long-term sustainability. “Although, tech companies might have issues on the social side of ESG they are at the forefront of the E as they fund their business with renewable energy and use artificial intelligence (AI) to be more efficient. “So, RI funds were doing well before Covid because of their exposure to quality sectors,” Cox says. “They are doing well now because of the resilience of those two sectors.” Local Pensions Partnership also reports an outperformance in its responsible investments this year. Chief investment officer Richard Tomlinson says that the quality businesses that an RI assessment can uncover is key. “We do not track RI in our portfolio,” he says. “The businesses that have high RI weightings tend to be the businesses we like because we invest in quality companies that have sustainable cash-flows and a sustainable competitive position for the long- term. So, we have seen some outperformance. “My personal belief is that these RI characteristics are going to drive longer-term performance,” he adds. Tomlinson points to the social contract that every enterprise has with society, which is evolving and that RI is at the core of it. “Covid has accelerated that transition where significant sec- tors and businesses are different to where they were six months ago,” he says. “They are relying ever more on government and societal support, the idea of the Pret economy and getting peo- ple back into London, all this type of stuff. “The interaction between society, government and corporate enterprises has become ever tighter. It means that RI has come to the fore. “Companies well aligned to that future state are part of what has driven performance over the past six months,” Tomlinson adds. “It is a long-winded way of saying that there has been an
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