we make around our engagement activities, whether they are successful or not. That remains a big challenge. Every engagement is a partial success because you are raising an issue, bringing it to the fore, particularly, if the ESG specialist and capital allocator are in the room with the company. That is a powerful situation to be in. That gives us great leverage from our engagement activi- ties. My question is, can we sit in front of our clients and say, we asked for this, the company did it because we asked for it and being genuine about that. There are incidences of it. It took a year of talking with a large UK beverage company to get them to introduce ESG metrics into their executive pay arrangements. That is an engagement success.


PI: Is it easy to get consistent and accurate non- financial data from the corporates that you invest in?


Marshall: It remains a challenge overall, but it has improved. It is night and day to what it was five years ago. We still have to make assumptions to fill in gaps and clean data which we do not think is reliable. The level of assurance that covers carbon data is not great and the cost of accessing the data is high. I look forward to when providing verification of car- bon data is a requirement and so the cost will come down, which should be a good outcome for everyone. Going back to the regulations that are coming in for asset owners in the UK, the way those regulations are pitched will take account of data gaps and the relative immaturity of ESG data at the corpo- rate level. Regulators shouldn’t expect perfection right now – though they are entitled to expect ambition – and I would encour- age everyone to be honest in their disclosures. There has been too much competitiveness in the ESG industry, whereas this “comply- or-explain” basis that the Stewardship Code has is a good way to say we have done some good work here but there are some areas for improvement. That will be looked upon favourably by regula- tors and stakeholders.


PI: Are you expecting perfection, Jane? Firth: The extent of carbon disclosure depends on the market, so you are relying on ESG data providers and the methodology that they use for estimating corporate emission levels. It becomes trickier when you are in fixed income. The data is patchy and the further down the credit chain you go the more chal- lenging it becomes. We manage a big alternatives fund where the challenges are much greater because you are three steps away from the company emitting those greenhouse gases.


14 March 2021 portfolio institutional roundtable: Responsible investing


There are huge challenges and it is about us all working together with the industry to get that clarity and better disclosure. Jackson: Data consistency is a huge problem throughout the industry. Corporates have their own ways of reporting data and it is not always easy to aggregate that information to understand what our impact is as an asset owner or where we should prioritise activity.


PI: What ESG trends do you expect to see in the next 12 months? Llewellyn-Waters: One issue we have not discussed is John Kerry’s appointment as special climate envoy. That should not be underes- timated as it infers a meaningful acceleration of global climate policy.


Then there is social equality. We saw last year that the most mar- ginalised are carrying the heaviest toll in terms of fatalities and economic impact.


The pandemic has also set global poverty back a decade with mil- lions of people pushed into the definition of extreme poverty. How companies respond to this urgent social issue will be critical. In terms of capital flows, the next generation of savers will triple their share of global gross income in the next nine years. There is a preference within that saver base for stakeholder investing. A PwC report indicates that, in a best-case scenario, 50% of assets under management will have ESG embedded by 2025, which is a significant shift. Firth: For us, data disclosure and quality is an important area. It is getting better but there is a long way to go. We need consistency


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