Magnus Billing on how pension funds can aid post pandemic recovery

Magnus Billing, CEO at Alecta, talks to Climate Action ahead of the Sustainable Investment Forum Europe about how pension funds can aid post pandemic recovery by building on the momentum of the sustainability agenda.

Do you think pension funds will lead the way in post COVID recovery and innovations?

I do think that the pandemic has accelerated certain main trends, including but not limited to sustainability, and the pension industry will have to adapt to the acceleration. We may see some pension funds lead the way, trying to leverage the main trend of sustainability and sustainable investing. As an industry I do believe it will require adjusting to and reacting to the strong impetus coming from customer base, policy measures from regulators and legislators and corporate innovations.

How has the pandemic impacted upon asset allocation decisions? How have you adapted to fiduciary requirements coupled with changing demographics and populations?

Over time the ageing population is impacting the allocation within the portfolio and it is one of several. Another is the COVID-19 impact on specific business sectors, where some have benefitted from COVID others have suffered permanent and structural damages. Taking a more holistic view on this allocation topic we are likely to see a drift towards more investments into alternatives assets in general. Due to search for yield, increased volatility and protection from inflation or even potential stagflation.

In supporting post pandemic recovery do you think that pension funds have an opportunity to build on the momentum of the sustainability agenda over the past few years? What barriers remain in scaling up these efforts?

The sustainability issue has developed into an issue of capturing opportunities and managing risks from a portfolio management point of view. This is a good development. There are many challenges remaining before sustainable investing can be considered mainstream. These challenges range from, for example, skewed incentives within the investment chain, data, standardisation and proliferation of investment products.

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Magnus Billing will be speaking at the Sustainable Investment Forum Europe in April, bringing together asset owners and managers, ratings agencies, banks, UN and Government policymakers, investors, development banks, think tanks, and NGOs committed to driving forward the sustainable finance agenda. Register your place for free here.