Portfolio design

Environmental, social and governance (ESG) in the time of Corona

Alex Pollak |26-Mar-2020

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Three months ago I joined BlackRock’s Fiduciary Management team as Head of Clients after leading the firms’ business in Israel for 11 years. Having spent much of that time covering Israeli pension schemes and European plans prior to that, I couldn’t be more excited to return to the UK and be part of this fast growing area of the industry. But moving countries and joining the Fiduciary Management business in such unprecedented times has been surreal. Three weeks ago I joined my first Pensions and Lifetime Saving Association (PLSA) conference in Edinburgh, which feels a lifetime ago since the Coronavirus outbreak swept across the world.   

As part of the conference I led two roundtables focused on portfolio construction in the context of Fiduciary Management. While the current market environment was of course top of mind, the discussion also focused on some of the longer-term challenges and solutions needed for UK pension schemes. Participants clearly see ESG solutions as one of these but there was a concern about how to apply some of the new regulatory directives and consensus that asset managers should support schemes through these changes. Risk management also generated an interesting debate with schemes acknowledging the need to put more time and thought into thinking through their asset allocation models, especially to protect portfolios during times of macro-economic uncertainty. Going beyond this there was also a general agreement that technology should play a greater role in the industry.

Coming out of the conference, where we are slowly adjusting to a new normal, two things are clear to me:

  • The current market environment and the unprecedented levels of volatility we’re experiencing, as well as the action that is now being taken by policy makers, is resulting in a multitude of opinions on how to best position portfolios for the short, medium and long-term. For our latest insights to help investors unravel the path forward, we’ve assembled our most relevant insights here.
  • ESG is a huge focus in the broad market as well as in the UK pensions funds industry and there is appetite from schemes for more thought leadership and innovative solutions. Explore more on sustainable investing.

And finally, and most importantly, in these challenging and unprecedented times, stay safe and well.

The opinions expressed are as of March 2020 and are subject to change at any time due to changes in market or economic conditions. The above descriptions are meant to be illustrative only.