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European Plan Sponsors Need Joined Up Approach to ESG

09 August 2012 (PLANSPONSOREurope.com) –European plan sponsors committed to environmental, social and governance (ESG) need to be aware of whether their pension fund follows suit in their investment approach, Jane Ambachtsheer, Mercer’s Global Head of Responsible Investment has told PLANSPONSOR Europe.

This week Mercer announced that its proprietary ESG ratings will now be included in client reports related to manager searches and performance. Mercer assigns ESG ratings across investment styles, asset classes and geographies as part of its manager research process.

Ambachtsheer told PLANSPONSOR Europe: “European companies need to understand the connection between sustainability and long-term profitability. This ensures fund managers managing DB or DC assets are also looking at that relationship. The world is changing and resources are scarce. Do you want to make sure that the companies your fund managers are investing in on your behalf are as resilient to those types of changes as they can be? From a corporate perspective if you have evolved your processes as a company and embedded sustainability into your DNA then do you think it is prudent to invest in companies with no regards to how those invested entities are managing sustainability considerations?

“How do your managers stack up? Are they 1, 2, 3 or 4? If you as a company believe sustainability can help to drive long-term profitability but your fund managers are 4s which means they don’t take this into account when they’re choosing stocks does that make you uncomfortable?

“There is a pensions inconsistency gap. Even if the pension fund is a separate legal entity the spirit or belief that sustainability drivers will drive long term value is something that as a fiduciary you should bring over to your pension plan if you really believe that is a long term driver of value which a lot of European companies do and they live in a policy environment where they have to believe that.”

 

PLANSPONSOREurope Staff
editors@plansponsoreurope.com





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