Tom Gosling

All good recommendations from Martin Wolf, but lacking one key reform: teach people about finance. We continually see too many recommendations that suggest changes that assume either full financial literacy, classic "economic rationality" or the opposite, that there's no point educating people, just do stuff for them. Start now, teaching people about money, and watch the quality of conversation transform over the next 10 and 20 years. https://on.ft.com/3V9yBOm

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Great piece from Martin Richmond at Professional Pensions on The Society of Pension Professionals latest discussion paper. Our paper analyses government proposals to push pension funds to disclose their investment levels and ensure at least 5% are invested in UK equity - and the unintended consequences that may arise from doing so. https://lnkd.in/dxRfu8EA #spp #pensions #pension #investment #trustees #pensiontrustees #policy #publicpolicy

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A hard-hitting article on ESG research was released today in a news service from the FT. It is behind a paywall, but I can tell you it draws heavily on two of my (and Luca Berchicci's) replications of publications that helped launch the ESG boom. In 2022, Luca and I replicated an article by Khan, Serafeim, and Yoon (2016) which claims ESG can lead to a 600 basis point benefit over the market. (Don't laugh.)  KSY, as the original paper is called, was used by Calvert and other investment management firms to argue that ESG was good for investors (and sell ESG funds).  Luca and I found its results are based on an error in the construction of a key variable. Our article is here:: https://lnkd.in/ebbKWz_b The other replication mentioned in the FT article is of a publication in Management Science by Eccles, Ioannou, and Serafeim (2014).  That article may be one of the most influential publications on ESG in the last 20 years.  It has been used by the head of the SEC, by former US VP Al Gore, and by Wall Street managers. Editors at Management Science now admit it includes a typo: the authors meant to write that their result was NOT significant, but they forgot to type "not". No chuckling.  My replication is still unpublished (more on that in a future post), but the latest version can be downloaded here: https://lnkd.in/eKikfnRj Tariq Fancy Auden Schendler Jitendra Aswani Desiree Fixler Michael Lenox Mike Barnett Mike ToffelAlex Edmans Tom Gosling Tom Lyon Bhaskar Chakravorti Alison Taylor Aswath Damodaran John Streur John Sterman Florian Berg Florian Heeb Lisa Sachs Bill Baue Laura Marie Edinger-Schons Duncan Austin Luca Berchicci Ken Pucker Eddie Riedl Nalin Kulatilaka

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Pensions for Purpose is currently looking for asset managers to undertake research using the OMINDEX survey in partnership with The Maturity Institute. We recognise that finding aligned asset managers on the integration of purpose and stakeholder value is a crucial piece of the puzzle in ensuring their impact on people and planet is integrated. This is about integrity - the ability to say that your words match your actions and that you’re not afraid to ask difficult questions of yourselves. The Maturity Institute's Total Stakeholder Value (TSV) model is a leadership and management tool that links data: Human Value, Business Value and Impact. We are all on a journey and this is an opportunity for us all to learn and grow. If you are one of our asset manager members or an asset manager just interested in going through this process, please contact me directly - [email protected]. While asset managers may have their own surveys and monitoring tools, nothing beats an independent review. If you are a trustee or investment consultant, please encourage your asset managers to consider this. #totalstakeholdervalue #impact #purpose #integrity

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The FRC has launched a consultation on updates to the 2020 UK Stewardship Code this week. I encourage investors to read Adam Matthews and Stephen Barrie's posts on the critical issue of the stewardship definition, which the FRC is proposing to change to emphasise "the need to create long-term sustainable value for clients and beneficiaries as a key outcome of good stewardship". Creating sustainable value for clients and beneficiaries should be core to the stewardship proposition - correct. Including the viability of economic, social and environmental systems upon which clients/beneficiaries depend in that assessment of "sustainable value creation" for clients/beneficiaries - also correct. BOTH are required to drive better member outcomes when dealing with systemic risks. Is it crucial that any stewardship definition explicitly acknowledges this connection? Now more than ever. Don't believe me? Take a look at this excerpt from the recent FMLC paper on pension fund trustees and fiduciary duty............................ One thing (among others) that is increasing is dispute or litigation risk in connection with businesses’ and governments’ response (or lack of response) to the subject of climate change. Because the subject of climate change is a worldwide issue, this is a risk that can present from anywhere in the world. It brings its own relevant issues, including possible adverse outcome and responses, but also the cost, the time and the element of uncertainty in litigation or arbitration. If it is a risk that comes with an investment it may outlast the holding of an investment. Pension funds exist as participants in much wider financial and economic networks. It is a feature of the subject of climate change that it is of major scale. From the position of the pension fund trustee, all the changes identified above or the possibility of them may be relevant to the return of a particular investment and the risk to that return. But so too certain investment strategies, principles and policies may be particularly vulnerable to their impact. And, as with sustainability generally, in the context of a pension fund and the purpose of a pension scheme, relevant too is the effect of the subject of climate change on return or risk anywhere across the pension fund and including by reference to all applicable time horizons. Financial factors therefore need to be considered at a number of levels: at the level of a specific asset or investment, at a portfolio level, and at the level of whole economies material to the pension fund. In responding to this consultation, please support the explicit acknowledgement of economic, social and environmental systems in delivering value for members. In this political landscape, it is more important than ever. Adam Matthews Stephen Barrie Faith Ward Vaishnavi Ravishankar Shipra Gupta Eva Cairns Claire Curtin Diandra Soobiah Renata Kostrzewa Caroline Escott Michael Marshall Jen Sisson People's Partnership

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With tomorrow’s UK election likely to deliver a Labour government, Stephanie Kelly and I sized up the implications for UK climate and energy policy. See below for our key takeaways 👇

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With the two-pot pension system set to go live on the 1st of September, in my latest column for Business Day, I look its basic structure, functions and rational - in light of behavioural heuristics in the pension space. I further consider its impact from an economic, individual and investment strategy perspective. Ultimately, withdrawals are discouraged, and any that are implemented should be carefully considered with the aid of a financial advisor, wealth manager or investment professional. #absa #absainvestments #absastockbrokers #absainsuranceandfinancialadvisors #AIFA #absawealth #absatrust #absaprivatewealth RICARDO SMITH: Two-pot or not to pot https://lnkd.in/dunYGS_V

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What does the new Labour government mean for infrastructure investment in the UK? We expect some interesting developments: * The creation of Great British Energy, a publicly-owned green power company, may crowd out some private investment (it will get £8.3 billion of Government funding) but will work in partnership with a range of public and private sector entities to deliver local power generation. * Investment in ports and supply chains (£1.8 billion), gigafactories (£1.5 billion), carbon capture (£1 billion) and green hydrogen (£0.5 billion). Many of these carry real risks to the public purse. But will they unlock investment opportunities for the private sector? * Reforms to planning laws are badly needed and Labour has promised to speed up the delivery of infrastructure. * Will we see a new and improved PFI/PPP programme (no doubt re-branded) to roll out social and economic structure? What do you think?

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Interesting article which appeared in the latest issue of The Chartered Governance Institute UK & Ireland digital magazine on the true meaning of # trueandfairview in the #financialstatements which now also should start addressing #sustainabilityaspect of the business. Worth the read..

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Dr Ben Caldecott, Co-Head of the Transition Plan Taskforce (TPT) Secretariat discusses in our Q&A how the TPT Framework will transform the way companies and governments develop, monitor and apply transition planning best practices to help make businesses more sustainable. Transition plans can serve as an essential tool in unlocking capital and financial resources needed to drive greater shifts to sustainability, with credible, well-defined pathways. With the IFRS Foundation assuming responsibility for TPT's disclosure materials within the context of the S2 Climate-related disclosures this will further expand global awareness and implementation of investor-grade, decision-useful material information. Read here: https://lnkd.in/ewBvnUPY "Achieving our Sustainability Transition with the Transition Planning Taskforce Disclosure Framework" in the Harvard ALI Social Impact Review. Brian Gougherty,Caroline Bridges, Carlos Portugal Gouvêa, Carrie Jenks, David Carlin, Denise Lucas, Elizabeth Seeger, Florian Berg, George Serafeim, Glen K. Yelton, Isabel de Saint Malo, Jason Jay, Jenny Bofinger-Schuster, John Sterman, Kate Levick, Melanie Paty Nagpal, Mike Tovey, Nicolaj Sebrell, CFA, Sandra J. Peters, Sue Lloyd, Timothy Whitehead #ALISocialImpactReview #IFRSFoundation #SustainableFinance #TransitionPlans

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The aim of the Roadmap is to put forward an investor and solutions-focused perspective on some of the key public policy priorities to boost low-carbon investment in the UK for the next five years. Read more in 'Boosting low-carbon investment in the UK: A Policy Roadmap' 📖 https://bit.ly/40coBaE #LowCarbon #UKEconomy #Policy

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Pension schemes have more of an effect on the environment than we think, and trustees of pension schemes should consider the potential risks of climate change on their ability to meet their fiduciary duties. From a governance perspective, the new General Code of Practice introduces new requirements for all trustees of pension schemes to consider climate change risk, while The Pensions Regulator recommends ensuring that risk is fully considered when setting investment strategies. Quantum Advisory’s Joe Condy analyses the environmental impact and the pension industry’s duties: https://lnkd.in/gKxwWBd4

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The Financial Reporting Council has significantly revised the UK Stewardship Code, introducing five new priority areas and reducing reporting burdens for signatories ➡️ bit.ly/3zNpOtK This means investment stewardship teams can dedicate more resources to engaging with portfolio companies, driving real-world change and promoting sustainable investment practices 🌍🌱 These changes align with our mission to streamline the engagement process and enhance the effectiveness of stewardship activities 📈 #InvestmentStewardship #SustainableInvesting #UKStewardshipCode #FRC

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As the appetite for impact investing grows among institutional asset owners, The Global Impact Investing Network (GIIN) sheds light on what defines an effective impact approach. A recent position paper from GIIN presents case studies of South Yorkshire Pension Fund, Dutch PGGM, Zurich Insurance, and MassMutual, showcasing a trio of strategies they share: 1️⃣ Defined Impact Priorities - Each investor has set clear priorities that align with their beneficiaries’ values, ensuring their investments address specific social or environmental needs. 2️⃣ Portfolio-Wide Opportunities - Identifying impact investments across asset classes enables a diversified yet focused approach. 3️⃣ Dual Focus on Returns & Outcomes - These institutional investors balance financial goals with meaningful, positive real-world outcomes aligned with their chosen impact priorities. GIIN’s Director of Institutional Engagement, Christian Rosenholm, emphasises the growing interest and potential influence institutional asset owners hold in impact investing. Currently, only 1% of global capital is dedicated to impact strategies; increasing this could significantly drive progress on global challenges. 👉 “If we can get to 5%, if we can get to 10%, we’ll have solved a lot of things,” Rosenholm notes. These insights offer a valuable blueprint for institutions keen to make a measurable difference through their portfolios. #ImpactInvesting #InstitutionalInvesting #SustainableFinance #GIIN

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