Panel: Pension funds should be ‘top of list’ for impact investing

Pension funds with an interest in net zero should be prioritised for impact investing. That was the message from Sophie Gioanni, head of investor relations at Netherlands-based fund manager ILX, at an industry event yesterday afternoon.

“Pension fund money wants to go and help [with impact investing] but often there is no conduit to it. As agents of mobilisation pension funds have to be at the top of the list”, Gioanni told delegates at the conference in London.

She argued that it was institutional investors that are “a bit ahead of time” in adopting new areas of finance such as impact investing, especially in Europe, and particularly in the Nordics.

The comments were made during a panel discussion at the Official Monetary and Financial Institutions Forum’s (OMFIF) Sustainable Policy Institute event, hosted in London. 

Also on the panel speaking on impact investment and portfolio management was Yvonne McCarthy, head of climate change at the Central Bank of Ireland, Michiel De Smet of the National Bank of Belgium, and Yuan Gao, vice president for fixed income and commodities at the UK branch of the China International Capital Corporation.

Greenwashing

The entrenched issue of greenwashing took centre stage during the discussion. The topic is extremely timely as the European Commission announced proposed common criteria against greenwashing and misleading environmental claims only yesterday.

McCarthy said: “We see greenwashing as a very significant potential risk. Greenwashing is a form of mis-selling, so of course it's harmful for consumers and investors generally. If somebody has been sold a product that doesn't accurately reflect the underlying sustainability characteristics that they’ve been promised, that's very worrying.”

When asked by Net Zero Investor on how the labelling schemes of the upcoming Sustainability Disclosure Requirements (SDR) from the UK and the “de facto” labelling scheme of the EU’s Sustainable Finance Disclosure Regulation (SFDR) affect impact investing, McCarthy said: “There needs to be some sort of framework to compare to. Yet we are still in a moment of learning, of reviewing and testing and changes are still possible." 

She singled out the EU taxonomy on sustainable activities as an example, "from which a lot of the further regulatory architecture is built in Europe, is well known to be a live document.”

Climate impact

This week the United Nations Intergovernmental Panel on Climate Change published its latest report, warning the world it is 'now or never' as it is extremely likely the most ambitious climate targets will be missed. 

The IPCC warned limiting warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial temperatures is no longer realistic, at least not within a decade as previously agreed.

Speaking at an earlier panel, Elías Albagli, chief economist at the Central Bank of Chile, said: “According to the latest IPCC Report the world has not met the Paris Accord. We now need to stop talking about climate risks, and start talking about climate impact.”

Albagli explained that what needed to be assessed going forward was the exposure of firms to both climate change’s physical risks and transition risks, and how that maps into the condition of the financial intermediaries that provide loans to these operations.

At the first day’s opening panel discussion, on the topic of the role central banks play in driving the net-zero transition, Franco Panfili, directorate general for markets and payment systems at Banca d’Italia, said: “We are faced with the dilemma of whether long term goals should be sacrificed by the short term situation. Right now this is between continuing on the path to net zero and dealing with current crises [such as inflation and the effects of the Ukraine war].”