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July 13, 2022

IMPROVEMENT STILL NEEDED WITH DIVERSITY

Private equity and debt firms are making progress on environmental, social, and governance (ESG) fronts, including diversity and the inclusion of women and other traditionally under-represented groups, says a survey by PineBridge Investments. However, while the survey showed that hiring and advancement of women and employees from traditionally under-represented groups are moving in the right direction, there is still significant room for improvement. The portion of managers surveyed who ensure the diversity of investment teams has grown to 49 per cent in 2022 from 26 per cent last year. It also found 100 per cent of European and emerging market (Asian, Latin American, and African) managers have ESG policies in place, compared with 80 per cent in North America. And 74 per cent of European managers and 71 per cent of Asian ones reported identifying pertinent climate-related performance indicators, while just 20 per cent of North American respondents do. Some 93 per cent are taking formal steps to support hiring diverse talent, an increase from 81 per cent last year. However, the portion of women on investment teams remains low, with just 18 per cent of those surveyed reporting that women hold at least a quarter of these roles.

July 13, 2022

PENSION PLAN FUNDING DECLINES

Over the month of June, the funded position of a typical pension plan declined on both solvency and accounting bases, says the ‘Pension Indices by LifeWorks’ report for the month of June. The investment return was -5.4 per cent for the month for a representative pension plan portfolio. The accounting pension expense index saw a drop in the month as the accounting discount rate increased and continues to indicate a significant anticipated decrease in next year’s pension expense. Commuted values have fallen dramatically as the average commuted value is 25 per cent lower than it was at the end of December 2021. “We are only six months into 2022 and from the perspective of financial markets to some maybe it feels more like six years,” says Stuart Morgan, a principal at LifeWorks. “Markets have been so fast moving it has been difficult for many to keep up.” However, the amount of volatility has created opportunities for some pension plans to de-risk. Even though assets have fallen, plan liabilities are also falling as longer-term interest rate expectations have increased.

July 13, 2022

DOOR LEFT OPEN FOR POLLUTERS

An analysis of 25 asset managers who are members of the Net Zero Asset Manager Initiative shows none has set an expectation that companies in their portfolios should quit developing new coal, oil, or gas projects in line with climate science, says research from Reclaim Finance and three partner NGOs. It looked at 30 major asset managers on their climate commitments. The report finds their policies and investment guidelines leave the door open for the polluters and are too flawed for the asset managers to align their entire portfolios with a net zero target.  Among the asset managers with policies, only seven restrict investments in companies developing new coal projects and none restrict investments in companies developing new oil and gas supply projects. Even more worryingly, it reveals a growing trend of policies and targets that apply only to a small share of their assets.