Transparency is the best disinfectant

It’s been two months since Corporate Adviser produced its “ESG in DC” report with its league table of workplace pension providers’s carbon footprints. The FT choose to write about the reaction of the providers to the league table produced by Emma Simon.

I am not going to comment on the placings as I know nothing about how carbon footprint is measured. The table is sourced from LGIM – commendably as L&G look like they have work to do, Smart Pension looks like it needs to get some fresh numbers in.

Hats off to Corporate Adviser for daring to publish! Good for the FT for picking up on the reactions. Many providers declined to comment.

SEI (if Smart are excluded for not getting in new data) sit bottom of the league. Their “spokesperson” complained that a single view did not a league table make. They may be right but they also featured in a Make my Money Matter shame list in February for the inadequacy of their net zero plan (alongside Hargreaves Lansdown and People’s Pension).

Over the years , Aviva, L&G and Nest have consistently topped good governance tables from a variety of sources, most notably Share Action. Though none of the tables are definitive, they create a general picture which helps people interested –  take a view.

The FT is nothing but even-handed

Pension providers who spoke to the FT, but did not wish to be quoted, raised concerns that league tables were unfair, given there was no industry-wide standard for measuring or presenting carbon emissions data.

Additionally, some investments made by funds in “climate and biodiversity solutions” tend to have higher emissions in the short term than pure index equity allocations.

“It is understandable that some pension providers are pushing back against carbon emission league tables, as these snapshots may not paint a full picture of what the provider is trying to achieve,”

said Sonia Kataora, partner at independent consultancy Barnett Waddingham.

“That said,” she added, “the various league tables produced have attracted attention, and consequently have encouraged pension providers to produce clearer explanations of their approaches. This is ultimately beneficial for all.”

There will be many who would have TPR- who collect and assess TCFD reports – publish their own tables. I would support this move as I would support the publication of value for money tables by TPR and FCA.

The public want independent information necessary for them to evaluate what they are investing into. If pension providers want engagement, then they have to accept it has to be on the consumer’s terms and not theirs.

Sure there will be cheating and sure there will be outliers, but we cannot make perfect the enemy of good and the tables we are getting at this stage are good enough.