Mr Waygood told FTAdviser: “This system has the unintended consequence that insurers’ money is tipped into ‘old economy’ stocks, such as oil, gas and big banks.
“This is because that is the type of company in the market for corporate bonds, which are considered less risky so have less of a capital charge than ‘new’ economy, which is likely to be more aligned with the Paris agreement on climate change.”
The committee also heard how long-term assets funds could help shift assets into more sustainable stocks.
Long-term assets funds is a new structure, set to be created by the Investment Association, which would not allow investors to access their cash at a day’s notice, as is the case with other funds in the IA sectors, and instead will offer less regular liquidity.
The aim is for the fund structure to allow investors in areas such as infrastructure and renewable energy to have access to an open-ended fund structure.
Speaking to the committee, Sandra Boss, global head of investment stewardship at BlackRock, said the structure could be a “great help” to bringing private capital to some of the investments which “really needed funding” in the UK.
She said: “There is an opportunity for long-term savings, where this is a multi-decade investment. At the moment, it is very difficult for small savers and retirement savers to get access to these types of products.
“But long-term asset funds would be safe, and have the right precautions around these illiquid assets and be overseen by an investment manager.”
imogen.tew@ft.com
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