This comes just a day after the European Commission publishing their sustainable finance proposals, which include proposed legislation for institutional investors – including pension trustees - to demonstrate how their investments are aligned with Environmental, Social and Governance (ESG) objectives, and requiring them to disclose how they comply with these duties. Both sit against a backdrop of the DWP having recently announced plans to consult on clarifying ESG fiduciary duties in the Occupational Pension Schemes (Investment) Regulations 2005, in June 2018.
Ralph McClelland, Partner at Sackers, commented: “The rate at which we now receive significant publications and proposals on ESG matters suggests a real determination on the part of key decision-making bodies to start pushing changes through. Whilst ESG has slowly been climbing up the trustee agenda for some time, it’s still far from where it needs to be. It’s going to be hard for pension trustees to ignore these issues for much longer.”
Stuart O’Brien, Partner at Sackers, commented: “True to its word, the EAC published each and every response from the UK’s largest pension funds on how they are managing climate change risk, with several being put on the naughty step for being ‘less-engaged’. However, when digging a little deeper, I wonder whether this categorisation is really fair. Some are likely to have extremely mature investment strategies which probably have only a tiny allocation to equities. These schemes may justifiably be approaching climate change risk in a different way. That said, it was encouraging to see how many of those surveyed were classified as “engaged” for the steps they are taking to manage the risks that climate change poses.”
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