portfolio institutional: What impact has Covid had on attitudes to- wards responsible investing? Abbie Llewellyn-Waters: The pandemic has accelerated the urgency of ESG factors. It has revealed a clear intersection between fiduci- ary duty and planet and people. To fulfil fiduciary duty, these con- siderations need to be embedded across asset allocations. We see legal, commercial and regulatory drivers converging, meaning that as an industry we should be tackling these issues as primary considerations rather than as add-ons. A clear correlation has been accelerated by the pandemic where capital markets are meaningfully starting to reflect broader stake- holder factors in asset prices, underpinning the intrinsic competi- tive advantage of companies who address these challenges. Ian Burger: The pandemic has accelerated the S component of ESG. We are seeing that in a geopolitical context, coupled with social factors around human rights and employee relations, which have often been less well covered in ESG. Edward Lees: Covid has caused a large economic slowdown and governments have responded by stimulating and many used this as an opportunity to stimulate by greening. This, along with mass policy advancements, has accelerated things around the world and shifts what we have been doing. As investors we react to those spe- cific policies which give us something tangible to look at and sort through. Covid has taught us that it is a bad idea to ignore an existential problem. You should tackle it before it becomes uncontrollable and that lesson is particularly relevant for the climate. Covid has opened our eyes to how much we can accomplish as a collective when we put our minds to it. The origination of the vac- cine was exceptionally fast and is an example of how much pro- gress can be made in a short period of time if we work together and think bigger. Michael Marshall: The move to stakeholder capitalism has been galvanised and accelerated through the pandemic. It is a shame that it took a crisis to make that happen.


In 2020 we saw differences in capital distribution to what we might have ordinarily seen with executives taking bonus holidays and distributions to shareholders de-prioritised. It will be interest- ing to see the extent to which that persists in 2021. The way we analyse companies has changed. Health and safety as a material factor has changed because of the pandemic. An office- based worker is now as much at risk as a construction worker would have been in the traditional view of health and safety. All of the above gives credence to this S in ESG argument, which so many have made. Jane Firth: Before the pandemic there were many conversations about the relevance of environmental, social and governance issues and if they are just a nice to have in good times. There was a risk that climate change would get pushed down the agenda, but the reverse has happened. With COP26 in Glasgow


8 March 2021 portfolio institutional roundtable: Responsible investing


this year there has been an increased focus on climate and build- ing back better now that we have that opportunity. Jacqueline Amy Jackson: A lot of the benefits we have seen have been through increased willingness to engage. It was once easy to hail fiduciary duty as a key priority and hide behind it to prioritise short-term profit alone. Yet, with the debate emerging around broader stakeholder capitalism, it is becoming harder for asset owners and corporates to ignore the myriad of risks that can quickly be internalised directly impacting balance sheets. An obvi- ous example is a systemic risk such as climate change. Whilst it is difficult to manage those more opaque but intercon- nected ESG impacts, we are finding that there is less reluctance from the wider market to deny the importance of these issues making it easier to start an engagement and get broader stakeholder buy-in. Ian Gamon: That recognition and understanding of the systemic risk that we have and how quickly things can change, such as the impact on oil and gas last March, opens eyes and makes conversa- tions with trustees easier.


COP26 coming down the line and the Department of Work and Pensions’ consultation on new climate regulations have driven ESG and particularly climate change issues up the agendas of trustee boards. It is moving in the right direction from a consultant’s per- spective in trying to motivate trustees to engage on these issues.


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