DB schemes increasing focus on ESG factors in de-risking decisions

Defined benefit (DB) pension schemes are increasingly taking environmental, social and governance (ESG) considerations into account in buy-in decisions, Hymans Robertson has stated.

ESG considerations are being given this additional focus due to increasing environmental expectation of members, the consultancy noted.

With buy-ins becoming a more likely outcome for DB pension schemes, and growth in this area looking set to continue, the importance of ESG has “never been greater for risk transfer”.

The results of polling at a recent webinar held by the firm supported this, as nearly two-thirds of trustees (62 per cent) said that they were willing to pay a higher buy-in premium in return for an insurer with better ESG credentials.

This insurer scrutiny looks set to continue as they begin to comply with new FCA rules to make climate-related disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).

Hymans Robertson head of ESG for risk transfer, Paul Hewitson, commented: “The scale of investment within ESG presents a huge opportunity for the risk transfer market which can materially improve its position within this area and create real change.

“The willingness of insurers to move towards investing in a greener way must be recognised and this will benefit both pension scheme members and our wider society.

“The indications from our webinar poll, finding that nearly two-thirds of trustees are willing to pay for better ESG credentials, demonstrates that there is a clear need for insurers to improve what they offer within this area and differentiate themselves in the marketplace.

“The importance of ESG will only continue to gain momentum and increase in importance to trustees, and the risk transfer market.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth. Please click here for an edited write-up of the video

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video interviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today. Please click here for an edited write-up of the video

Savings and finance at retirement
Laura Blows is joined by Claire Felgate, Head of Global Consultant Relations, UK, at BlackRock, to discuss savings and finance at retirement. Please click here for an edited write-up of the video

Cost transparency
Pensions Age editor, Laura Blows, discusses investment cost transparency and savings with Aon’s Neil Smith and Chris Hawksworth. Please click here for an edited write-up of the video
Multi asset credit
Pensions Age editor, Laura Blows, discusses multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih

Advertisement Advertisement