Daily ESG Briefing: Two thirds of pension funds to increase passive allocation to social investment, says study

The latest developments in sustainable finance

Two thirds of pension funds plan to increase their allocations to “‘S’ pillar passive funds” over the next three years, according to research from DWS and CREATE-Research, which focuses on the role of social issues in investment decision-making. 142 pension funds across 17 jurisdictions with €2.1tn in collective assets participated in the survey. 67% said they will also select their passive manager based on their social track record.

Five of Canada's major public pension funds have seen their combined stakes in oil sand companies rise by 147% compared to last year, according to Reuters. The five funds are the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, Ontario Teachers' Pension Plan, British Columbia Investment Management Corp and the Public Sector Pension Investment Board. The increased exposure comes from both rising share prices and stock purchases.     

The Global Steering Group for Impact Investment (GSG) will be conducting a study with the G7 and G20 on the utility of the different ESG and impact standards. Speaking at an OECD & UNDP event on the launch of Impact Standards for Financing Sustainable Development, GSG CEO Cliff Prior said the work would look at whether the mix of different standards works and how they could most usefully be harmonised.

ISS ESG has said that “most investors and companies are yet to confront the reality of Net Zero targets requiring not just offsets, but genuine atmospheric carbon removals”. In a new report, the responsible investment arm of Institutional Shareholder Services identifies this and other ‘blind spots’ for investors – issues it describes as “absent from most climate discussions”. 

US Senator Mark Warner has introduced a bill which would require companies to disclose crucial workforce management metrics, including investments made in skills training, workforce safety and employee retention. “This legislation will help provide a clearer picture of how public companies are managing, supporting, and investing in their workers – factors that significantly influence a company’s ability to innovate and compete,” he said.

Mercer has launched a service to help asset owners assess the effectiveness of their ESG integration, and adopt best practice. The Responsible Investment Total Evaluation tool uses 75 data points based on regulation, climate risk and other ESG factors, to evaluate investors’ ESG position (graded from A++ to C). Specific actions will be identified on the back of the assessment, to help encourage “interventions that can deliver positive impact and make a difference to society and the environment”. Progress will be tracked so that investors can demonstrate improvements. 

The PRI Awards, which recognises signatories with leading ESG practices on stewardship, impact research, integration and emerging market investments, closes today. The competition is open to all signatories except those who are on the PRI's engagement list for failing to meet its membership criteria.