IGGiQ Targets Level Playing Field for UK Pension Funds
Data-driven platform seeks to empower mid-tier trustees and sponsors with rollout of ESG-focused module.
The information shortfalls facing smaller pension schemes when developing sustainable investment strategies are the inspiration for Independent Governance Group’s (IGG) recently released IGGiQ tool, which aims to improve ESG data integration and management.
The UK-based pensions trusteeship and governance services provider has partnered with ESG data and investment solutions firm Impact Cubed on the platform’s ESG module. The collaboration aims to support trustees and sponsors of small- and mid-tier schemes in integrating ESG factors into investment strategies to enhance long-term outcomes, while ensuring transparency for stakeholders.
“We selected ESG Insight for our first module as it’s an area where we see more engagement from pension schemes,” Vikram Chatrath, Head of Funding Solutions and Analytics at IGG, told ESG Investor. “While larger pension schemes have been involved in reporting initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD), we’re keen to ensure ESG is fully integrated into decision making across all schemes, and not just seen in terms of compliance and reporting requirements.”
IGG sees the new tool as particularly suited to schemes that have found it increasingly challenging to track and disclose their climate and sustainability risks.
A 2023 report from investment consultants WTW warned that defined benefit pension schemes with under £1 billion (US$1.27 billion) in assets may not be able to keep pace with reporting requirements arising from TCFD. According to research by pensions and financial consultancy firm Hymans Robertson, pension funds’ TCFD compliance has been hindered by the failure of their private markets managers to provide required climate data.
“A lot of tools are only accessible to very large pension schemes,” said Chatrath. “We want to make sure even the smallest pension schemes have access to IGGiQ, and that it offers support regardless of skill level.”
Pension funds with more than £10 billion (US$12.7 billion) in AUM are already utilising IGGiQ’s ESG Insight module, according to IGG. In total, the organisation works with more than 390 schemes with a combined asset value of approximately £322 billion. The firm’s clients range in size from schemes managing total assets in the low millions to those responsible for much larger portfolios, with around 10% of IGG’s schemes larger than £1 billion.
The experience of the larger funds already using the ESG Insight module will be used to the benefit of smaller ones, said Chatrath.
“IGGiQ is for all sizes of pension schemes, and we have designed the tool to make it as accessible as possible for schemes across the spectrum,” he added.
Delivering data consistency
The new platform provides an overview of key pension scheme metrics, with data sourced directly from schemes’ holdings, enhanced by the insights delivered by partners – such as Impact Cubed for ESG – to bolster trustee decision-making and transparency.
Chatrath said IGGiQ aims to address the data disaggregation that is a common barrier in sustainable investment, which can hinder trustees in understanding the risks and opportunities in their portfolios.
“One can end up in a situation where data is hidden from key decision makers, so that trustees may not be looking at the same piece of information as others around the table. That makes it really difficult to have a conversation and is not a good use of governance time,” he said.
“It’s about having a consistent database. If everyone can get the information they need, we can have better conversations which allow for more impactful decisions around funding, risk analytics or ESG,” Chatrath added.
“It makes sense for us to include the ESG element as a primary piece of the technology. It’s good for schemes of all sizes to utilise the module to get the same information and the same granularity.”
Last June, a report from Pensions for Purpose found 62% of UK pensions funds had failed to invest in any natural capital solutions, while in February a report published by campaign group Make My Money Matter and sustainability research provider Profundo found that even large defined contribution pension providers were failing to develop a robust climate strategy.
According to Chatrath, IGGiQ seeks to embolden pension funds to make climate- and nature-positive investments by providing greater access to data, as well as offering improved tools to scrutinise the activities of schemes’ primary advisors.
“In addition to interrogating asset managers and investment consultants on ESG impacts of investment decisions, the tool can inform users to ask why carbon or deforestation metrics have gone up, for example. It can also help them understand how data points are being calculated and that there is a consistent basis for that calculation,” he said.
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