Pensions - Articles - 73 percent of pension seek to influence climate change

Over 400 trustees and employers of UK pensions schemes attending the XPS Pensions Group’s annual conference yesterday at the London Science Museum, believe now is the time to acknowledge and make a difference to climate change with 60% of schemes having already moved away from a traditional investment approach.

 At yesterday’s conference hosted by XPS, industry specialists discussed the key areas of concern for trustees and pension schemes including, member profiling and engagement, optimising support and protection to ensure members achieve better outcomes and the global impact of climate change. Pension schemes are now required to incorporate Environmental, Social and Governance (ESG) factors into their investment strategies. With it being evident that returns are not detrimentally affected by investing responsibly, now is the time to take action.
 As part of the conference, attendees were asked about their investment approach and their attitude to influencing climate change:
 • 60% describe their overall investment approach as responsible or sustainable
 • Whereas, 40% believe they still have a traditional investment approach
 • 25% of pensions schemes acknowledge climate change as a risk out of their control
 • 73% believe that pension schemes should seek to positively influence climate change action

 Simeon Willis, CIO at XPS Pensions Group said: “The world is changing and so must the way we invest. UK pension schemes underestimate the power they have to influence change by incorporating ESG and sustainability into their long-term strategy. Investments are no longer just about risk and reward, an additional ESG lens and measurable outcomes for wider society need to be a considered. Trustees need to evaluate their investment managers and demand more, standing up for what they and their members want. This is an opportunity for change, not just a box ticking exercise.”
 Stephen King, keynote speaker at the conference, shared his insights on the fundamental economic crisis of changing demographics, sighting the challenges of meeting the needs of the retirement population alongside the working population. Also speaking at today’s event, the RT. Hon. Nick Sherry discussed the key lessons we can learn from the Australian Pension system in embedding the foundations of a good DC system. Nick highlighted that when employees are compelled to save then there is a responsibility to ensure good outcomes and strong governance.
 Paul Cuff, CEO, XPS Pensions Group commented: “The pensions industry is operating in a turbulent economic environment of Brexit uncertainty, global trade wars and developing pressure on climate change. These uncertainties are having a huge impact on investment markets and sponsoring employers alike, and there is much to be done to keep schemes safe. Beyond that, pension schemes, with the vast assets under management, can be a great force for positive change. At the same time, at the level of the individual, there are big challenges around keeping members safe in the options and freedoms they choose. Our conference looked at all of these areas with a real focus on the practical steps we can all take to make things better.”

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