Opperman probes 50 largest schemes for ESG action

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Pensions minister Guy Opperman has written to 50 of the biggest pension schemes to remind trustees that they have to set out clearly their environmental, social and governance, and climate change policies.

The reminder follows the implementation of new regulations on 1 October which means pension funds have to state their ESG policy in their statement of investment principles.

“Pension funds are a powerful weapon in the fight against climate change. Despite some good work by a number of schemes, some are not acting. We need urgency on this vital issue from trustees and investment managers," Opperman said.

“New regulations came into force last week, I’m demanding that the remaining pension schemes and the fund managers they appoint stop shuffling their feet. They must meet their responsibilities to savers now and in the future, and to protect the future of the planet.”

Opperman made it clear to the 50 schemes that circumstances in which neither climate nor other ESG risks are financially material were likely to be “extremely limited”.

He said: “It is part and parcel of trustees’ fiduciary duty to take account of these risks when setting out investment strategy and to explain that clearly to investors.”

The minister also probed the schemes on what changes they have made to their investment strategies to take account of ESG and climate change, and to their stewardship policies to ensure that trustees act as engaged investors. 

Opperman has asked schemes to provide their ESG and climate change, stewardship and members’ views sections of their SIPs, to compile a record so that he can monitor compliance and highlight best practice.

In addition, he asked if schemes report in line with the Task Force on Climate-related Financial Disclosures framework.

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