Large Asset Owners Lauded for Pushing Sustainable Investing

A new study by Willis Towers Watson’s Thinking Ahead institute is highlighting the increasingly significant role large asset managers have in contributing to the well-being of humanity via sustainable investing practices.

The institute argues that these investors, many of which are institutions, “have no choice but to take seriously their financial stakes and responsibilities and lead from the front.”

“The major investment markets failed to make progress in 2018, but these funds in many cases were able to avoid losing ground against their longer-term targets by sensible diversification, in particular to private markets,” said Roger Urwin, global head of content at the Thinking Ahead Institute.

Institutional investors face pressure from the public to formulate sustainable investment strategies and, in many cases, divest from corporations and assets that perpetuate a “harmful” effect on our society. One such example is consistent pressure on the California Public Employees’ Retirement System (CalPERS) from organizations like Fossil Free California to divest from assets associated with coal and thermal energy. Meanwhile, the $68 billion United Nations pension fund recently announced its portfolio will be carbon-free by 2020.

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The study highlighted the tight amalgamation of capital at the top of the asset manager pyramid and noted that the largest 100 asset owners constitute 35% of all global asset owner capital. The five largest funds in the world, in order, are the Government Pension Investment Fund (Japan), Government Pension Fund of Norway, Pension Fund Corporation of China, Abu Dhabi Investment Authority, and the Kuwait Investment Authority.

The institute also says that asset owners are facing lower expected returns, and their future success is contingent on adapting to sustainable investment strategies. Large asset owners have been taking note of this particular concern, such as the $207.4 billion New York State Common Retirement Fund, which received a report from a group tasked by Gov. Andrew Cuomo asserting that the institution must have 100% sustainable investments by 2030.

A study recently published by asset manager Schroders founds that the volume of cynics of the sustainable investment industry have fallen by nearly 50% in just three years. Despite the sharp rise in believers, however, not everyone is convinced, as nearly one-fifth of investors (19%) said they do not invest in sustainable investment funds.

“Sustainability has now become an unavoidable issue and talk on sustainability is becoming action,” Bob Collie, head of research at the Thinking Ahead Institute, said in a previous statement related to a sustainability-focused study.

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Tags: Asset Owners, ESG, responsibility, Sustainability, thinktank, Willis Towers Watson

The former head of a UK charity supporting the disabled has pleaded guilty to defrauding the charity’s pension plan out of more than £250,000 ($322,000).

Patrick McLarry, 71, admitted to taking the funds from the Yateley Industries for the Disabled pension plan to buy homes in France and Hampshire, England for himself and his wife, and to pay off a personal debt. At the time of the fraud, McLarry was the chief executive and chairman of the charity, and a director of VerdePlanet Limited, the corporate trustee of the charity’s pension plan.

The Pensions Regulator (TPR), which brought the prosecution, said it will seek a confiscation order to force McLarry to return the money he took from the pension.

“McLarry posed as a pillar of the community while he was secretly working to steal for himself the pension savings of dozens of disabled workers,” Nicola Parish, TPR’s executive director of frontline regulation, said in a statement. “He lied repeatedly to try to muddy the waters around him but our investigators cut through his attempts at deception to uncover the truth.”

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TPR said its investigation uncovered that before VerdePlanet was appointed the trustee of the plan, the corporate trustee took the unusual step of amending the pension plan’s definitive deed. That meant the trustee was unable to pursue McLarry for the funds which he eventually took.

Between March 2012 and February 2013, McLarry arranged for more than £256,127 to be transferred into bank accounts he controlled from the charity pension. He used the money to buy a home and a small warehouse in the south of France, a house in Hampshire, England, and to repay a debt.

The regulator said McLarry tried to hide his actions by forging documents, lying to TPR investigators about who owned the properties involved, and then refusing to hand over important evidence.

TPR convicted McLarry for failing to hand over bank statements at trial in April 2017. The statements revealed that he had used the plan’s funds to purchase a house in France.

“It is a serious matter and the only outcome is a substantial prison sentence,” Salisbury Crown Court Judge Andrew Barnett said as McLarry pleaded guilty.

McLarry will be sentenced December 13. Fraud carries a maximum sentence of 10 years imprisonment in the UK. McLarry’s wife, Sandra, was charged with four counts of money laundering but the TPR decided not to proceed against her, saying that it was not in the public interest.

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Tags: Charity, Fraud, Patrick McLarry, Pension, The Pensions Regulator, TPR