Pension schemes are increasingly ESG-driven: in Italy, 62% of the FFS survey respondents apply sustainable investment strategies
• 53 schemes with €127 billion of AUM apply sustainable investment strategies to the products monitored.
• More schemes adopt sustainable investment strategies to 75%-100% of their assets and set sustainability targets for their managers.
• These are the findings of the ItaSIF survey presented during the 9th edition of the SRI Week.
The sixth edition of “The sustainable investment policies of pension schemes” survey was conducted by the Italian Sustainable Investment Forum (ItaSIF) in collaboration with Mefop and MondoInstitutional.
The survey interviewed a sample of 115 pension schemes with over €236 billion of AUM and found an increase in the number of respondents that apply sustainable and responsible investment (SRI) strategies and a greater awareness of the financial importance of environmental, social and governance (ESG) themes. The evolution of European regulations on transparency (IORP II Directive and Sustainable Finance Disclosure Regulation – SFDR) and stewardship (Shareholders Rights II Directive) will help consolidate these trends further.
The survey was supported by ENPACL, HDI Assicurazioni, Sella SGR and Vigeo Eiris.
• 85 schemes with €184 billion of AUM (74% of the sample) answered the questionnaire.
• 62% of respondents (53 schemes with €127 billion of AUM) apply sustainable investment strategies to the products monitored, up from 2019 when the schemes using SRI accounted for 47% of respondents.
• The main reason why pension fund investors adopt sustainable investment strategies is a willingness to contribute towards sustainable development and manage financial risks more effectively, which points to a greater awareness of the financial importance of ESG.
• The interest of pension fund investors in sustainable finance is set to grow: indeed, 21 schemes that currently do not apply sustainable investment strategies are considering doing so and, in most cases (86%), the related evaluation process could end by the end of 2020.
• Compared to 2019, in absolute terms more schemes (25 up from 23) apply sustainable development strategies to 75%-100% of their assets and set sustainability targets for their financial managers.
• Over half of the schemes that use SRI introduced, or are planning on introducing, the investment portfolio carbon footprint calculation.
• The SRI strategies most widely used by pension fund investors are: exclusions, best in class and impact investing. Use of engagement and stewardship can be enhanced in the coming months as a result of initiatives for encouraging transposition of the Shareholders Rights II Directive (e.g., promotion of soft law initiatives to regulate investor engagement in investee companies).