The California State Teachers’ Retirement System, together with the Japan’s Government Pension Investment Fund and the USS Investment Management Ltd., which manages funds for the U.K.’s Universities Superannuation Scheme, are calling for long-term sustainability to become a more prevalent concern for corporations and asset managers alike, in a joint statement released in early March.
Systemics risks like climate change are key concerns for multi-generational investments like pension plans, it said.
“Within this multi-decade framework, companies that seek to maximize corporate revenue without considering their impacts on other stakeholders — including the environment, workers and communities — put their long-term growth at risk and are not attractive investment targets for us,” the statement said. “Similarly, asset managers that only focus on short-term, explicitly financial measures and ignore longer-term sustainability-related risks and opportunities are not attractive partners for us.”
The investors noted that they welcome progress companies and organizations are making to take a longer-term view of sustainable growth, including improvements to transparency in disclosing information through frameworks such as the Task Force for Climate-Related Financial Disclosures and the Sustainability Accounting Standards Board.
However, the statement said there is much more work to be done. “Entrenched interests remain strong and resistance to change is fierce,” it said.
Specifically, meaningful disclosure on relevant environmental, social and governance issues remains the exception for most companies rather than the rule. And progress on this front is inconsistent across many regions, the statement said.
As well, those who remain skeptical about the relevance of ESG integration are ignoring volumes of research, it added. “We live in a changing world; companies and asset managers who commit to sustainable value creation are not injecting politics into business, nor are the “virtue signalling.” They are fulfilling their duty to us, and by extension, fulfilling their duty to the millions of families depending on us.”