Pension advisory firms: UK trustees will be made aware of ESG guidance

The Association of Member-Nominated Trustees (AMNT) and the UK Sustainable Investment and Finance Association (UKSIF) have achieved a commitment by 12 leading investment consultants that they will make clients aware of the guidance from The Pensions Regulator that pension funds need to factor environmental, social and governance issues into their investment strategy.

The AMNT and UKSIF acted on behalf of members to bring together leading UK investment consultants to ask how their firms will act upon the guidance issued by TPR in March which has resulted in a public statement committing the firms to action.

The firms that have made the statement are Allenbridge; Aon Hewitt; Barnett Waddingham; bfinance
Cardano; Hymans Robertson; JLT Employee Benefits; Lane Clark & Peacock; Mercer; Quantum Advisory; Redington and Willis Towers Watson.

The investment consultants said that they recognised “that the recent investment guidance from The Pensions Regulator marks a major development in TPR’s approach to how trust-based DC and DB pension schemes need to address risks around long-term sustainability, including environmental, social and governance issues.”

We agree that this change, reflected in the TPR’s statement to trustees that ‘We expect you
to assess the financial materiality of these factors and to allow for them accordingly in the
development and implementation of your investment strategy’ puts trustees and their advisers
under an obligation to react.

“We believe that ESG is a fundamental part of success in long-term investing, therefore we are
drawing the guidance to the attention of UK pension fund clients through a variety of routes such as
putting consideration of ESG on trustee meeting agendas, issuing briefings and/or holding
training sessions. We also recognise the significant role that client-facing consultants can play in
ensuring that our clients are well informed on the issues.”

Janice Turner, co-chair of AMNT, said: “We were really concerned that our members, many of them small pension funds, would not be told of this absolutely vital advice from The Pensions Regulator. We are delighted that so many consultants – representing such a significant percentage of the market- have agreed to raise the issue with their clients.”

Simon Howard, chief executive of UKSIF, said: “We are delighted at the positive response from these important players in pensions. The Pensions Regulator’s guidance makes it clear that savers are entitled to have their money protected from visible threats such as climate change, and we hope that the commit

UK advisory firms trustees ESG guidance

Manifest’s Red Line Voting Monitor can help trustees meet their ESG responsibilities

ment from leading investment consultants to brief and help clients will accelerate the process. We look forward to working with all parties to make sure it does.”

The AMNT has developed the Red Line Voting Policy to help pension funds become more active, engaged and responsible investors and also means they can meet their responsibilities on  stewardship and responsible investment that are outlined under TPR guidance. Manifest has developed its Red Lines Monitor to enable AMNT members to implement Red Line Voting across their investment portfolios. Red Line Monitor equips trustees with detailed analyses of: how the stewardship of their assets is being managed; how individual companies measure up to the Red Lines and how the portfolio overall measures up to the Red Lines.

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