Skip to main content
Article

Five reasons why sustainability should matter to your pension scheme...

...and three ways your pension scheme can become a more responsible steward of assets

Pension Board and Trustee Consulting|Pensions Corporate Consulting|Pensions Technology|Retirement
N/A

December 3, 2019

Sustainability is the subject of the moment. However its vital importance should mean it continues to be a key consideration for trustee boards for years to come.
Adam Gillett discusses sustainability in pensions
Adam Gillett discusses sustainability in pensions

Here are five reasons why sustainability should matter to your pension scheme; and three ways your pension scheme can become a more responsible steward of assets.

The first reason is pure and simple: this is about making us better investors. Trustee boards who engage with these issues are likely to have a better considered approach to investment, and companies who are sustainable are likely to outperform those which haven’t thought about these issues.

The second reason is regulation. The 1st of October is the deadline for updates to pension schemes’ statements of investment principles. There is a lot more regulation to come.

The third reason is reputational risk. A lot of pension schemes are increasingly attuned to this and it is not a good idea to be caught on the wrong side of the sustainability debate.

Fourth, sustainability is a fantastic subject for engaging with members who care about these issues. We can talk about the subject in a way that members will understand. I recently took a boat trip down the River Thames to Corrie Riverside, a waste-to-energy facility.

Our trip followed the path of municipal waste that is non-recyclable and would otherwise go to landfill. This waste is taken down to the river in central and west London, loaded onto barges and shipped to east London. There it’s incinerated and turned into enough energy to supply 160,000 homes in London. It’s a great investment as it does good and delivers inflation-linked, stable returns. It’s also easy and tangible to explain to members.

The fifth reason to consider sustainability is its real-world impact. It is easy to think of investments as a table in PowerPoint, or a line on a graph. But underneath this data are real companies, working in the real world. Sustainability is a powerful tool for making this connection: going out of the office, down the river and seeing the assets in real life.

Luba Nikulina presents on becoming responsible stewards of assets
Luba Nikulina presents on becoming responsible stewards of assets

… and three ways your pension scheme can become a more responsible steward of assets


  1. Understand your beliefs. Setting up your portfolio with your beliefs reflected is incredibly important. We have a beliefs exercise that we facilitate for our clients. Taking the time to understand where you are and where you want to go pays off when it comes to investment, because you understand what you believe in. Knowing your members’ preferences is very helpful for this exercise.
  2. Make a plan. Sustainability is a journey and you will not be able to get there overnight. Measure your current situation and come up with some practical steps.
  3. Use data. The quality of data has improved and is continuing to improve. Some information is better than none. Dive in and use what is available. It will genuinely help you to better understand where you are right now, what matters and what could make a difference.

Next Chapter: The next steps trustees should take on GMP equalisation

Download
Title File Type File Size
Pensions and Savings Conference 2019 Overview PDF 1.5 MB
Contacts

Adam Gillett
Head of Sustainable Investment

Luba Nikulina
Managing Director, Head of Research

Related Insights

Related Content

Contact Us