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PLSA responds to European Commission consultation

08 April 2016

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The PLSA has responded to the European Commission's consultation on long-term and sustainable investment.

The consultation sought to gather information on how pension funds, among others in the investment chain, factor sustainability information into investment decisions.

In its response, PLSA said that as major, long-term investors in the EU economy, pension funds are already making significant strides in ensuring their investments are sustainable.

However, the report said, some obstacles remain, such as lack of scale and resources, insufficient data/provision of advice, and mis-alignment of timeframes.

The PLSA plays a key role in promoting the importance of incorporating Environmental, Social and Governance (ESG) factors into pension funds' investment decisions.

In 2013 the Association introduced its Stewardship Disclosure Framework improving pension funds' understanding of the different approaches taken to stewardship by various asset managers.

The Association's Stewardship Survey 2016 has also shown continued progress in recognising the importance of ESG factors and ensuring they are carefully considered when pension fund trustees set investment strategies and deal with their investment managers.

At a recent PLSA conference in Edinburgh, chief investment officer of The Pensions Trust, David Adkins commented on the importance of pension fund managers' response to environmental issues (PFI, March 17).

He said environmental factors and climate change will have far reaching implications for companies and assets that pension funds invest in.

Pension fund managers should focus on three key areas in response to the climate change movement; treat climate change risk the same as any other significant risk, focus on financial arguments and not emotional ones, and test the financial basis behind any portfolio proposal, he said.

"Climate change risk is not going to go away soon – 195 leaders did not turn up in Paris on a whim and they turned up to debate their individual and collective responses to the risk."

First published 08.04.2016

Lindsay.sharman@wilmigntonplc.com