8 in 10 trustees facing challenges implementing RI regulations

More than eight out of 10 trustees are estimated to have faced challenges when implementing new responsible investment (RI) regulations.

From 1 October, trustees of DB and DC schemes with more than one hundred members are expected to have detailed policies on how they take account of factors such as environmental, social and governance (ESG) considerations in their investment decision making.

In a survey, Hymans Robertson, found that 84 percent of trustee respondents have encountered issues with the new regulations.

These have included lack of clarity around the regulator’s expectations (43 per cent), low engagement from members (44 per cent), limited time and resource (40 per cent) and limited knowledge and understanding around RI issues (40 per cent).

Nearly a quarter (24 per cent) also said that the language used around RI was not well defined and clear.

Nevertheless, nearly all (96 per cent) of respondents said that they are prepared for the new regulations, with nearly three quarters supporting their introduction.

Ninety-one per cent of trustees have spent more time discussing RI in trustee meetings over the past year, with a fifth saying they have spent over five hours in meetings on the topic, while 84 per cent questioned had increased training on responsible investment.

Just under half of trustees think that implementing an RI strategy will improve their fund’s investment returns and nearly a third have said that they think their members care just as much about where their money is invested as they do about investment returns.

A third of trustees said that they thought the scheme or scheme members would be the main beneficiaries of the new regulations.

Hymans Robertson head of responsible investment, Simon Jones, said: “[Trustees] have clearly overcome the challenges they’ve faced and given a great amount of time to discuss the changes in their meetings.

“The fact that over two thirds of those questioned said they knew a lot about the regulation is encouraging too. The objective of the regulations is to drive changes in behaviour by asset owners, rather than simply being a box ticking exercise.

"It appears trustees have realised this. RI should form an integral part of trustees’ approach to investment decision.”

He added that while trustees’ enthusiasm and commitment to the regulations was a big step in the right direction, it should not be considered “job done” now that the requirements were in place.

“It is vital that RI doesn’t drop off the priority list once the deadline for meeting the regulatory requirements has passed, but rather that trustees continue to embed RI into their day-to-day activities,” he said.

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