I enjoyed the passion of Jennifer Lopes, a South African millennial who responded to my blog yesterday on the DWP’s new stance on responsible investment.
This is fantastic. Many Funds here in South Africa are turning to more green investing as well as socially responsible investing. I think what is important here is also balance. In saying this, I mean Funds must ensure that they are still diligent and do not expose member money to undue risk or poor investments, and must stay on track with legislational requirements and investment strategies. Members must also be made aware of where their money is being invested. An informed member is vital.
Not everyone will share her views, but it’s hard not to be touched by the strength of her expression.
Listening to the voices of people on social media, particularly the parts of social media, pensions do not normally reach (Facebook, Instagram in particular) is one of the things policy makers could do more of.
I’ve written in April about a superb presentation at DCIF by Janette Weir of Ignition House. She managed to convince a sceptical audience that the drive towards responsible investment was not from Government but from ordinary people who expected pension funds to behave responsibly on their behalf.
For those who commented yesterday and in April that it is not Government’s job to legislate for trustees of pension schemes to engage with responsible investment, here are some stats.
And this wish for responsible investment is not just something that is driven by millennials.
But it’s worth noting that the enthusiasm for keeping our planet blue, reduces sharply as people reach my age (56).
Who drives Governance?
We are used to thinking of Government as controlled by people of my age, who are neither in touch with, nor interested in , the views of younger generations.
That the DWP has decided to legislate, not on behalf of my generation, but on behalf of subsequent cohorts of investors – is very pleasing.
Too often us pension experts sit back and criticise short-sighted easy policy making without recognising genuine engagement with the views of the population as a whole.
In 2014, the Law Commission gave the pensions industry a kick up the Jacksey, warning them of the need to respond to changes in people’s thinking about environmental, social and governance issues. In the four years that have followed, precious little action has been taken – especially by those who control the DC funds which are so critical to younger generations.
When I look at the composition of DC trustee boards and IGCs , I see some diversity of sex and religion and ethnic origin, but I see very little diversity by age. The people who run our savings for us, are by and large people like me – in their fifties and sixties, with a mind set of people growing up in the sixties and seventies.
My selfish generation
Last night I sat through 90 minutes of excruciating “debate” at FT Live in the City. the debate was dominated by an elderly panel who were determined to stand up for the people in the room, who were elderly people like me, complaining about inheritance tax and the threat of having to pay national insurance on our earnings over 65.
There was no “debate” since everyone agreed that the agenda should be about us. In 90 minutes of discussion about how we live our later lives, the issues of how we manage our planet were not mentioned.
This is the point of Government and it is why I applaud this Government for requiring the trustees of the DC schemes that manage our money, to take account of the financial consequences of climate change and make sure we do our bit to keep the planet blue.
They need to do it, because left to its own devices, my selfish generation would entirely ignore the needs of the planet and those who live on it after we are gone. This is precisely why the DWP has to legislate to get change in trustee behaviours on stewardship of responsible investing.
Of course, my generation has on average , at least another 30 years of occupancy and – though we do not have the imagination to picture ourselves on the blue planet in 2050, there is every chance we will be. We are not only being selfish to others, we are being short-sighted and mean to ourselves,
Why are DC trustee boards exclusively peopled by baby boomers?
For all the complacency and narcissm of the “debate” I attended, I am delighted that the Government is requiring fiduciaries to act as stewards. I am more delighted than ashamed.
If the DWP’s paper can shake up the firms of independent trustees who I deal with professionally, to engage with the issues in the DWP’s paper, then it will have made a start.
But we need to look to younger generations to bolster trustees. If we look at the Trustee Board of NEST there are no millennials. The same is the case at People’s Pension . Now Pensions is no better. Even the forward thinking Smart Pensions has its trustee board packed with elderly men!
The IGC boards are no better. Every biography starts by lauding the member’s experience, there are no inexperienced trustees or IGC members because the boards are millennial free zones!
Where are the millennials?
I am ashamed that the trustee boards of the master trusts, the single employers occupational DC funds and the IGCs that control contract based arrangements are packed with baby boomers and almost entirely exclude the generations that are saving today.
Perhaps the most important aspect of the DWP’s paper will be that it will ask questions of the professional trustee firms that deliver the majority of members to these boards, whether they lack the diversity to do the job.
How do we find the millennials?
There are plenty of people under 40 who I know and who I would recommend today to sit on the boards of these IGCs and trust based schemes.
But we will not find these people by executive search, nor by talking with the professional trustee firms with their over-fifties clubs.
We need to be reaching out to the bright young things and invite them up on stage. If you don’t know where to find them, then drop me a line at firstname.lastname@example.org because a lot of them subscribe to this blog, are in our linked in groups and talk with us on twitter.
If you are under fifty and would like to sit on one of these boards, if you see sense in the DWP’s position on responsible investment and if you really think you can make your difference, why not drop me a line and I’ll see what I can do to help.
We need the voices of people like Jennifer Lopes to turn the DWP’s consultation paper into a reality.