The People’s Pension (TPP), managed by one of the U.K.’s largest independent trusts, has reallocated £28 billion away from their previous manager State Street.

Amundi and Invesco have instead been chosen to oversee this mandate, with a TPP Chairperson Mark Condron stating the pension fund chose “to prioritize sustainability, active stewardship, and long-term value creation for our nearly seven million members”.

This follows shortly after a group of financial institutions and pension funds, including TPP, publicly asked their asset managers to engage more actively with investee companies regarding climate risk.

Why does this matter?

Following Donald Trump’s inauguration, the common rhetoric has been that most corporates and investors will need to wheel back their sustainability commitments to avoid negative scrutiny.

Even in recent conversations with some emerging asset managers, they have expressed some reluctance to actively incorporate ESG into their processes, due to the fear of it harming their capital raising efforts.

This is the clearest example that that there is still significant appetite from the largest and most influential European investors for ESG integration into fund management, which they regard (to quote TPP) as creating long-term value.

TPP identified two asset managers who actively market their responsible investing efforts as clearly differentiating them from their peers.

Amundi integrates ESG considerations across all of its funds and has credited responsible investing for being one of the key cornerstones of their process.

Likewise, Invesco carries out over 2,200 engagements with portfolio companies annually on ESG topics - and TPP referred to this active engagement as being key to the manager's selection.

Integrum ESG is constantly in discussions with new and emerging fund managers who - despite making it clear they are not running sustainable/responsible/environmental funds - have been asked by would-be investors to demonstrate how they are managing ESG risks in the portfolio.

Rather than being pressured to de-prioritise ESG, unless their client is a US governmental organisation, most fund managers are being asked to produce more ESG data - in order to back up their claims of integrating sustainability with ever more granularity.

Savvy emerging managers should see this for the opportunity it is - a chance to truly differentiate themselves from their peers, and reassure potential investors that they understand ESG as a set of non-traditional risks that need to be managed.

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𝗧𝗵𝗶𝘀 𝗮𝗿𝘁𝗶𝗰𝗹𝗲 𝘄𝗮𝘀 𝘄𝗿𝗶𝘁𝘁𝗲𝗻 𝗯𝘆 𝗜𝗻𝘁𝗲𝗴𝗿𝘂𝗺 𝗘𝗦𝗚 𝗕𝗗𝗠 𝗦𝗵𝗮𝘂𝗻𝗮 𝗢'𝗖𝗼𝗻𝗻𝗼𝗿.

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