ESG issues in pensions—an introduction
ESG issues in pensions—an introduction

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • ESG issues in pensions—an introduction
  • What are ESG considerations?
  • Can trustees of occupational pension schemes take account of ESG considerations?
  • Why can ESG considerations be financially material?
  • Are ESG considerations always financially material?
  • ESG requirements placed on trustees of occupational pension schemes
  • SIP policy on ESG considerations
  • Extension of SIP stewardship policy to cover ESG matters
  • Further requirement to manage climate change risk
  • Pensions Regulator update to code of practice on internal controls
  • More...

STOP PRESS 1: On 27 January 2021, the DWP published the final version of the Pensions Climate Risk Industry Group’s (PCRIG) non-statutory guidance for trustees of occupational pension schemes on assessing, managing and reporting climate-related risks in line with recommendations from the TCFD, although the formal response to the consultation on the non-statutory guidance has not yet been published and is still awaited.

The guidance consists of four parts: an introduction; trustee governance, strategy and risk management—how to integrate and disclose climate-related risks; scenario analysis; and setting metrics and targets to measure and manage climate-related risk. Both full length and summary ‘quick start guide’ versions of each part have been produced.
STOP PRESS 2: The Pensions Regulator (TPR) has published its new  climate change strategy calling on trustees of occupational pension schemes to act now to protect savers from climate risk. The new strategy comes ahead of proposed regulations to be made under the Pension Schemes Act 2021 which will require trustees of larger occupational pension schemes to maintain oversight of, and make mandatory disclosures in relation to, climate risks.

Beyond these proposed requirements, the strategy outlines TPR’s expectations that all scheme trustees will comply with existing requirements to publish their statement of investment principles (SIP)—including their policies on stewardship and financially material environmental considerations—and implementation statement.

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