5 things we learnt at the PLSA ESG Conference 2022

In many ways, the PLSA’s 2022 ESG Conference marked the end of an era, being (hopefully) the last time we host a purely digital conference. In March 2020 we had never hosted either a virtual conference, or a conference dedicated entirely to ESG, and now – almost exactly two years on – we’ve done several of both!

So what did we learn at the conference?

1. Climate change isn’t going away

Inevitably, many of the discussions touched on the escalating events in Ukraine, and what it all means for our pensions. In recent weeks we’ve seen a number of media commentators analyse what the invasion, and subsequent energy crisis, means for ESG policies - with many going as far as to suggest it undermines the entire concept of ESG. Speakers at the conference, however, disagreed. It’s clear that net zero alignment remains an important factor across schemes, particularly in light of the update from the IPCC showing the situation is more grave than we feared. During the panel discussion on greening finance, the CIO of NEST noted that this situation strengthened the case for renewables in the coming years, and that valuations were already beginning to reflect this.

2. Changes to the DC Charge Cap are probably coming

Though she wasn’t specific, many have speculated that Secretary of State Thérèse Coffey’s confirmation that the Government plans for legislation to enable investment into more ‘illiquid assets’ is effectively confirmation that plans previously consulted on, to exclude performance fees from the DC Charge Cap, will now progress.

3. 2023 will be the Year of the Trustee

In the same speech, the Minister announced for the first time that 2023 will be the ‘Year of the Trustee’, “to recognise some of the excellent work trustees are already doing, as well as provide more support through a programme of education and by promoting best practice”.

4. Social factors are high on agendas

Though the ‘S’ factor so often takes a backseat to the ‘E’, it felt that the 2022 conference marked a turning point in the prominence of social considerations in investment discussions. We heard about new research from the PLSA, CIPD, the High Pay Centre and Railpen demonstrating growing demand for data on workforces to inform investment decisions and stewardship. We also discussed the importance of a just transition – according to the TUC, “the progressive investor community needs to keep doing what it's doing and do it perhaps quicker if it can do”.

5. Stewardship is vital

Recent years have brought a wave of new disclosure requirements, which has dominated a lot of the debate. However, on the eve of the PLSA and Investment Association Taskforce publishing its report on effective stewardship, it was clear that expectations on schemes to also consider how they can positively influence those investments are increasing. Thérèse Coffey’s view – that "it is not enough for schemes to just passively report on their climate risks" - was reflected on the panel with members of the taskforce, who stated we should expect a series of recommendations – aimed at both asset owners and investment managers – with a view to creating a minimum standard on stewardship.

No doubt these discussions and debates will continue at Investment Conference in Edinburgh in May – you can book your place here.