CEPAR-UNSW Business School Forum
Connections: ESG, Pension Fund Investment, Public Policy and the Future
Jointly hosted by CEPAR and the UNSW Business School
Friday, 22 July, 9am - 12.00pm [AEST]
Online (weblink details will be provided in event reminders to your registered email-address ahead of the event)
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22 July 2022, Sydney (Australian Eastern Standard Time [AEST]) |
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9:00-9:15 |
Welcome and Opening Remarks John Piggott, CEPAR Director, Scientia Professor, School of Economics, UNSW Sydney |
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9:15-10:50 |
Session 1: New Perspectives on ESG: Connections with Pension Investment, Pension Design and the Macroeconomy Chair: Hazel Bateman, CEPAR Deputy Director, Professor, School of RIsk & Actuarial Studies, UNSW Business School |
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9:15-9:35 |
Pensions and ESG: The economics is straightforward, but the politics … Nick Barr, Professor of Public Economics, London School of Economics |
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9:35-9:55 |
ESG Investment by Pension Funds: Selected Policy Issues André Laboul, Chief Policy Advisor of the International Organisation of Pension Supervisors (IOPS) |
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9:55-10:15 |
Global Economic Impacts of Climate Shocks, Climate Policy and Changes in Climate Risk Assessment Warwick McKibbin, Distinguished Professor of Economics, CEPAR, Australian National University |
| 10:15-10:35 | Combined Q&A Discussion |
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10:35-10:45 |
Break |
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10:45-11:55 |
Session 2: Panel Discussion Chair: Marc de Cure, CEPAR Advisory Board Chair, Adjunct Professor, CEPAR, UNSW Business School |
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Panellists include:
» click here to VIEW/DOWNLOAD PRESENTATION SLIDES «
» click here to VIEW/DOWNLOAD PRESENTATION SLIDES «
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| Combined Discussion | |
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11:55-12:00 |
Closing Remarks |
Environmental, Social and Governance (ESG) factors are receiving increasing attention in the financial, investment management and policy community. Climate change and its environmental impact poses major challenges for society; social justice issues such as reducing exploitative and unfair labour conditions are gaining increasing profile among consumers; and the complexity of the external environment requires better governance.
Pension funds, and in particular their investment policies and priorities, are at the centre of these developments. On the one hand, pensions are increasingly pre-funded. The dramatic increases in asset accumulation in recent decades within pension funds attests to their potential influence in ESG implementation. This contrasts sharply with earlier eras of retirement policy, which was built largely around income flows between generations, mediated through centralised government structures.
This CEPAR-UNSW Business School Forum is about the connections that pension funds and policymakers need to make between pension assets (and equally, liabilities) and ESG considerations, as well as with social objectives. The long-term nature of pension contracts indicates that thinking about value requires careful consideration of the range of factors likely to affect the environment and future market demand. Equally, the long-term nature of pre-funded pension contracts requires robust and foresightful governance.
ESG policy and its implementation faces major challenges, from determining the scope of ESG to formulating appropriate guidelines that balance national concerns and underlying values of ESG with pension fund member interests.
This Forum aims to advance thinking and debate on how to implement ESG most effectively in coming years. Issues such as the appropriate level and scope of ESG, issues of measurement and regulation, the relative weights that should be accorded the various domains of ESG (for example human rights, acceptable methods and products such as guns and environment) will be explored. Both macro and micro perspectives will be presented. The macroeconomic context in which there will be increasing decentralisation of global production and more automation will also be an important part of the discussion.
The Forum will comprise three presentations from academic and institutional experts, followed by a Discussion Panel comprising practice professionals and chaired by Marc de Cure, CEPAR Advisory Board Chair and Adjunct Professor, CEPAR, UNSW Business School.
Speakers and Panellists include:
- Amy Auster, Partner, State Government Funds, PwC
- Nick Barr, Professor of Public Economics, London School of Economics
- Joanna Chang, Investment Risk Specialist, Australian Prudential Regulation Authority (APRA)
- André Laboul, Chief Policy Advisor of the International Organisation of Pensions Supervisors (IOPS), Senior Advisor and Lecturer in various institutions
- Liza McDonald, Head of Responsible Investments, Aware Super
- Warwick McKibbin, Distinguished Professor of Economics, CEPAR, Australian National University
Hazel Bateman is Professor in the School of Risk & Actuarial Studies, UNSW Sydney, and a Chief Investigator and Deputy Director of CEPAR. She has expertise in pension economics, behavioural retirement insurance and lifecycle finance. Her current research investigates the role of choice and information architecture, financial advice and financial literacy on lifecycle financial decisions including superannuation, housing and aged care financing.
Hazel works closely with the financial services industry, superannuation and pension funds and policy makers in Australia and internationally and has consulted to international organisations including the World Bank and the OECD. She is Chair of the Netspar Scientific Council, a member of the Consultative Committee of UniSuper, an academic member of the China Ageing Finance Forum and serves on the Advisory Boards of the Mercer CFA Institute Global Pension index and the Conexus Institute. In 2019 she was appointed inaugural President of the International Pensions Research Association (IPRA).
Marc J de Cure is Chair of the CEPAR Advisory Board and Adjunct Professor, CEPAR, UNSW Business School.
Marc has recognised since 2001 the social and economic significance of demographic change and the need to undertake and promulgate research to inform government policy, social awareness and commercial responses. He played a key role in establishing CEPAR and provides critical input to the development of the Centre’s ongoing strategy, research translation and engagement activities. He has chaired both the Advisory Board and the Leaders’ Forum since inception. Marc has been a member of the Business Advisory Council of the UNSW Business School since 2001 and was appointed as an Adjunct Professor at the UNSW Business School in 2015. He holds a Bachelor of Commerce (Honours) from UNSW and is a Fellow of the Institute of Chartered Accountants ANZ. Marc has been a non-executive company director and senior executive in financial and professional services groups globally. He was AIA Group’s Executive Vice President & CFO and AMP Group’s CFO, Executive General Manager Strategy and Executive General Manager responsible for AMP Bank and Virgin Money, and a senior partner in PwC and Bain & Co and AMP’s Asian and European Operations.
Pensions and ESG: The economics is straightforward, but the politics …
Nick Barr (London School of Economics)
» VIEW/DOWNLOAD PRESENTATION SLIDES «
Abstract: The first part of the talk will summarise the main market failures – externalities (negative and positive), uncertainty, imperfect information, co-ordination problems and time inconsistency. The next two parts will discuss two approaches – regulation and incentives – to addressing those market failures, particularly as they apply to the choices facing pension fund managers: regulation includes the provision of clear definitions, accurate information, audit and enforcement; incentives include efficient pricing of carbon use, both currently and – to address time inconsistency – in the future. The fourth part will point to the changing technical environment (albeit in uncertain ways and with uncertain timing), necessitating that policy should be regarded as a process, not an event. The last part will consider the political environment, in particular government failure and some of the pressures from private actors in the pensions space, both of which can give excessive weight to the short run.
Nicholas Barr FRSA has an MSc in Economics from the London School of Economics and a PhD from the University of California, Berkeley, where he was a Fulbright Scholar. He is Professor of Public Economics at the London School of Economics, writing widely on topics relating to the welfare state, including 130 papers in scholarly journals and edited volumes, and over twenty books, including The Economics of the Welfare State (6th edition, 2020), Pension Reform: A Short Guide (with Peter Diamond) (2010, also in Chinese and Spanish), and Financing Higher Education: Answers from the UK (with Iain Crawford), (2005).
ESG Investment by Pension Funds: Selected Policy Issues
André Laboul (Chief Policy Advisor of the International Organisation of Pensions Supervisors (IOPS), Senior Advisor and Lecturer in various institutions)
» VIEW/DOWNLOAD PRESENTATION SLIDES «
Abstract: While various policy initiatives are currently undertaken on ESG investment, there is still a need for further work, especially as far as pension funds are concerned. The International Organisation of Pension Supervisors took recently a major initiative with the release in 2019 of the IOPS Supervisory guidelines on the integration of ESG factors in the investment and risk management of pension funds. These guidelines address numerous issues related to ESG investment by pension funds, including fiduciary rights, the rights of the beneficiaries, transparency issues and the fundamental need to consider ESG factors when investing, but in an appropriate balanced approach. The IOPS is currently developing work to facilitate the implementation of these guidelines, taking into consideration other international initiatives. This session will provide an opportunity to discuss major public policy issues related to ESG investment by pension funds, including its supervision.
André Laboul held senior positions at the OECD including as the Special financial advisor to OECD G20 Sherpa, the Head of OECD Financial Affairs Division (in charge of finance, insurance, pensions, debt management, financial education and consumer protection) and the OECD coordinator for infrastructure. He was also the Secretary General of IOPS (International Organisation of Pension Supervisors), Chair of the INFE (International Network for Financial Education) and managing Editor of the Journal of Pension Economics and Finance. After retiring end of 2021, André’s current engagements include Lecturer at Science Po, Dauphine University and Edhec in France. He is also the chief policy advisory of IOPS, senior advisor at EDHEC Infra institute, and senior policy advisor at INFE.
Global Economic Impacts of Climate Shocks, Climate Policy and Changes in Climate Risk Assessment
Roshen Fernando, Larry Weifeng Liu, and Warwick J. McKibbin (CEPAR, CAMA, ANU)
» VIEW/DOWNLOAD PRESENTATION SLIDES «
Abstract: This presentation will summarize new research on the global economic consequences of climate-related risks in three broad areas: (1) the macroeconomic impacts of physical chronic and extreme climate risks; (2) the macroeconomic effects of climate policies designed to transition to net zero emissions by 2050 (transition risk); and (3) the potential macroeconomic consequences of changes in risk premia in financial markets associated with increasing concern over climate events.
We consider four widely used climate scenarios (Representative Concentration Pathways, or RCP), and estimate the physical damage functions due to chronic climate risks: sea-level rise, crop yield changes, heat-induced impacts on labour, and increased incidence of diseases. We also estimate the future incidence of climate-related extreme events: droughts, floods, heat waves, cold waves, storms and wildfires, using climatic variables under the climate scenarios.
The results demonstrate that physical climate risk is likely to cause large economic losses in all RCP scenarios, both through chronic climate change and extreme climate shocks.
Transition risks vary according to the ambition and the design of policies to reduce emissions. The results demonstrate that there can be potentially significant costs associated with policies to reduce emissions, and the costs differ across sectors and across countries.
Warwick McKibbin AO, FASSA is a Distinguished Professor of Economics and Public Policy and Director of the Centre for Applied Macroeconomic Analysis (CAMA) in the Crawford School of Public Policy at the Australian National University (ANU). He is also Director of Policy Engagement, and ANU Node Leader, of the ARC Centre of Excellence in Population Ageing Research (CEPAR). Professor McKibbin is internationally renowned for his contributions to global economic modeling. Professor McKibbin has published more than 200 academic papers as well as being a regular commentator in the popular press. He has authored/edited 5 books including “Climate Change Policy after Kyoto: A Blueprint for a Realistic Approach” with Professor Peter Wilcoxen of Syracuse University. He has been a consultant for many international agencies and a range of governments on issues of macroeconomic policy, international trade and finance, greenhouse policy issues, global demographic change, and the economic cost of pandemics.
Forum Panellists:
Amy Auster is Partner, PwC, State Government Funds. Amy has 20 years experience in finance and financial services across the private and public sectors, including 10 years as a senior executive in ANZ Banking Group before joining Victorian Department of Treasury and Finance as Deputy Secretary, Economic. As Deputy Secretary, Amy worked closely with senior executives, ministerial advisers and ministers to consider innovative ways to finance policy innovation. WorkSafe, TAC and VMIA were in her portfolio responsibility, and she worked with NSW Treasury as a fellow member of the Deputy Heads of Treasury under CFFR.
» VIEW/DOWNLOAD PRESENTATION SLIDES «
Joanna Chang, CFA, FRM is an Investment Risk Specialist at the Australian Prudential Regulation Authority (APRA). She provides advice and guidance on investment risk matters relating to super funds and insurers with a current focus on investment governance and ESG risk management. Joanna has spoken at industry conferences both locally and overseas on governance related topics including management of climate related financial risks. Joanna has also previously served as a Technical Advisor to the House of Representatives Standing Committee on Economics. Prior to joining APRA, Joanna held several roles within Westpac’s institutional division across financial markets trading and corporate advisory areas. Joanna is a member of the global CFA Institute Education Advisory Committee which provides oversight and guidance to the processes by which CFA Institute develops program curriculum materials for the CFA Program and other course offerings.
» VIEW/DOWNLOAD PRESENTATION SLIDES «
Liza McDonald is Head of Responsible Investments at Aware Super. Liza has over 24 years’ experience in the superannuation sector and is a specialist and passionate advocate for Responsible Investments and Sustainable Finance. As Head of Responsible Investments, she has led the development and implementation of the Fund’s Responsible Investment policies, the execution of the Climate Change Strategy and also manages the ESG policy implementation including manager and asset class ESG reviews. Liza represents Aware Super on a number of working groups and committees including Investors Against Slavery & Trafficking APAC (IAST-APAC); ESG Research Australia; the Australian Sustainable Finance Initiative (ASFI); the Responsible Investment Association Australasia (RIAA); 40:40 Vision; the Australian Council of Superannuation Investors (ACSI) and the UN convened Global Investors for Sustainable Development Alliance (GISD). Liza holds a Post Graduate Diploma of Applied Finance at Kaplan Education and is a Graduate of AICD.
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About CEPAR
The ARC Centre of Excellence in Population Ageing Research (CEPAR) is a unique collaboration between academia, government and industry, committed to delivering solutions to one of the major economic and social challenges of the 21st century.
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UNSW Business School equips the next generation of business professionals with the skills to thrive in an ever-changing world. From undergraduate, postgraduate and postgraduate research to our AGSM MBA, UNSW Business School offers an extensive choice of programs designed to equip students with the knowledge and skills needed to thrive in the contemporary workplace. Our curriculum is built with a ‘career ready’ mindset and students are immersed in active learning experiences and exposed to practical skills and tools they can immediately apply to real business problems.
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