I’d alert readers to an excellent thought piece by LCP consultant, Sam Cobley. You can read it here.
Sam ponders why, while every trustee and IGC chair is now commenting on Responsible Investment and Environmental, Social and Governance issues. So few are doing anything about investing in a responsible way.
His conclusion is that fiduciaries and consultants don’t want to be the first movers.
I’d be a little more blunt. They’d rather see someone else making mistakes and hoover up after them, avoiding the risk of reputational damage.
The problem with #metoo is that it doesn’t progress matters very far. This week LGIM, the investment arm of L&G decided to stop being #metoo and start voting against the constitution of boards where less than 25% directors are female. It’s comment was that the pace of change in this area has been too slow.
And of course there was a backlash in investment circles at what was taken as an unnecessary intervention into the governance of companies.
What is really scary about LGIM is that when it votes, it’s vote is a matter of public record and their sustainability team aren’t shy about naming names. That’s a long way from almost any consultancy I can think of. Even LCP have to publish data from surveys without putting names to data or opinion.
In my opinion, the tipping point for Responsible Investment will come when IGCs and Trustees stop being shy and demand action of their fund managers. Rather than hiding behind RI and ESG policies, fiduciaries need to actively boast that they are helping their members to the added value that can be garnered from the green pound.
The advisers to such fiduciaries need to be more rigorous and assert the need to include ESG strategies in the default investment options they advise on. Trustees need to be proud of going green with their investments, rather than awkward.
But here there is a further problem. Advisers, like their clients, are caught by the tide that always sweeps them back to where they were. So proposals to adopt a green default – appear and then recede. How rare is it that they sail out to sea!
One board of trustee that has gone public with its default is the staff workplace pension scheme of the HSBC Bank. Not only did it create in “Future World” a default for its own staff, but it shared the product so that it can be invested in by others. My personal DC money is invested in Future World and I am happy to pay twice as much for the management of my money the “Future World” way, than in L&G’s equivalent passive global equity tracker.
There – I said it – a consultant outing himself over RI and ESG issues and like the “only gay in the village” – parading around in all his green vulnerability.
So here’s my challenge to Sam Cobley and the authors of LCP’s “Behind the scenes: Are investment managers delivering on their responsible investment claims?” and “The LCP Responsible Investment Survey “- Matt Gibson, Claire Jones and John Clements.
“Are your personal pension pots invested in a green way? If they are, are you prepared to share why? If not – are you prepared to share why?”
I suspect that #metoo can work both ways and when we see consultants adopting green strategies and boasting they are prepared to have the courage of their convictions, then we will see positive #metoo behaviours among clients.
Other than First Actuarial, I know no other consultancy to which I can address this question. So how about it LCP – are you up for that challenge – and First Actuarial, will you respond to it?
Do we really believe in Responsible Investment? The proof in the pudding is what we do with our own money!