He adds: “For those members who have very specific interests, there are many solutions available via self-select funds.”
Smith says it is worth noting that nearly all investments have an ESG impact, as “for members, it’s about where each fund is on the spectrum for E,S and G. Armed with this information, members who want to take a sustainable or ethical interest in their investments can do so”.
For Ryan Medlock, Royal London’s senior investment development manager, there are a variety of solutions available to employees who want a particular focus on ESG integration or stewardship. He says: “There are new solutions continuing to launch on a regular basis marketed as either ‘sustainable’ or ‘responsible’, and I applaud the collective innovation in this area.”
However, Medlock notes this often comes at an additional cost for the consumer and the industry. Consequently, this approach might lose many customers who would otherwise have been keen or able to afford these strategies if they were made more easily accessible. He says: “We cannot afford to turn responsible investment into an exclusive club which prices some customers out.”
Medlock adds that in a regulatory era where the focus is increasingly being placed on a duty to provide positive consumer outcomes, moving into higher-charged funds goes against the grain.
“As an industry, we can’t just sit back and be passive," Medlock says. "Product manufacturers should be implementing ESG integration techniques into investment processes and exercising their stewardship responsibilities as standard and transparently.”
Two routes to investment
Brian Henderson, partner and head of sustainable investment at Mercer, says that for those with company-based DC schemes there are two routes available to invest.
He says: “Firstly, in line with the majority of DC savers, the default option is the first place to look. Many defaults these days have started to integrate ESG or climate into the underlying assets, or have dedicated investments through an ESG or climate fund.
“Secondly, some schemes offer members self-select options that are ESG-related. If neither are sufficient for the member, they may want to request if there is an option to transfer their savings to a provider who does offer what they are looking for.”
Ruth Gillbe is a freelance journalist
