Pools could aid ESG analysis, say industry experts

Myriad challenges face local government pension schemes in balancing responsible investing with the need to generate sufficient investment returns, according to a white paper.

Camradata’s report, Responsible Investing – the new normal, cited the lack of a standard ESG assessment process and the varied scoring systems used by ESG ratings agencies, which could confuse asset owners seeking greater understanding.

It also pointed out that while 10 of the largest global owners of renewable energy were utilities, they were also not entirely green.

Investors needed to understand “such linkages and relative shades of greenness” even within single companies when deciding what ESG means and where to put their capital, the paper said.

The white paper was published following a Local Authority Responsible Investing roundtable, where participants included Enfield Council, Local Pensions Partnership and Investec Asset Management.

Managing director at Camradata, Sean Thompson, said: “It’s estimated that £330 billion is held within Local Government Pension Schemes and with this comes great responsibility regarding both their members and the planet. But many schemes are slow at adopting ‘clean’ investing principles.”

However, industry attendees agreed that the new UK policy of pooling public sector pension investments was expected to help shape mandates more consistently and cohesively by creating teams with the facility to research the market more thoroughly to ultimately improve funding levels for all.