What are the considerations for pension plans looking at ESG, and how are trustees addressing this issue?
The trustees want to make sure ESG is an intrinsic part of our process as a manager, and that's something we've done for a long time.
They ask a lot and there is demand, not only for sustainable products, but to make sure that in our portfolios we are doing the right thing, engaging with issuers about the environmental and social implications of their business practices.
We recently had a couple of roundtables with various trustees and it became clear that ESG considerations are an important topic for them.
The main challenge that they have experienced to date is that there is so much information and there is no standard way for companies to report it, so the trustees themselves must push their part to ensure that managers focus on sustainable investing. .
How important are the recent regulatory changes in Europe and the US?
A lot is happening in Europe. Right now, there are so many directives, initiatives, labels, etc. different operating at the same time that can distract companies and institutions from trying to implement the right changes. From my point of view, there needs to be general regulation that provides effective guidance to both investors and bond issuers.
In Europe, the industry has been relatively proactive on ESG factors. By contrast, the US has been so far behind that ESGs weren't really on our customers' radar there until recently. However, with President Biden's focus on climate change, we found that it has accelerated and, in our opinion, that is really positive.
Can bond funds have a real influence on ESG issues in companies?
Obviously, as bondholders, we do not have the right to vote to express our opinions about a company's business practices, as shareholders do. But every portfolio manager has a relationship with these companies. If we want to express our dissatisfaction with a sender about something or
we want to influence them to act in a certain way, we have that direct route to the decision makers of the company.
