Master trusts are becoming more engaged with climate change policy advocacy but still have significant gaps to close if they are to use their influence effectively in members’ interests, analysis from LCP has suggested.

The consultancy assessed 16 of the UK’s largest master trusts, representing more than £200bn in assets, against its views on best practice for climate change policy advocacy.

LCP’s framework sets out seven principles for effective climate policy advocacy by master trusts: clear policy views, defined strategies, strong governance, adequate resourcing, diverse engagement methods, stakeholder engagement and transparent disclosure.

One of the clearest gaps identified was around policy views.

Only a few master trusts clearly set out their climate policy positions in a way that is easy for members and stakeholders to find.

Even where policy views exist, LCP found they are often buried in scheme documents and lack prominence, rather than being clearly and publicly articulated.

The research also highlighted widespread delegation of climate policy advocacy to sponsoring companies or other entities.

LCP said delegation can be effective where trustees maintain strong oversight and receive regular reporting, but its analysis found inconsistent practice: some boards review activity quarterly, while others have much less visibility of the advocacy being carried out on their behalf.

Indeed, on engagement strategies, most master trusts were found to have broad sustainability or stewardship frameworks, but relatively few have published distinct climate advocacy strategies.

LCP also noted that schemes typically emphasise company-level engagement, although some leading master trusts now have clear climate roadmaps and explicitly support policies designed to boost low-carbon investment.

Transparency and disclosure emerged as another weak spot.

While most master trusts maintain internal records of their interactions with policymakers and stakeholders, only a small number disclose these activities publicly.

LCP warned that, even where full disclosure is not possible, summarising the key themes, channels and outcomes of engagements can strengthen accountability and build member confidence.

Meanwhile, almost all of the master trusts analysed participate in collaborative initiatives such as the Institutional Investors Group on Climate Change (IIGCC) and UK Sustainable Investment and Finance Association (UKSIF).

However, where collaboration - often via sponsoring companies - is the main route for climate policy engagement, LCP stressed that trustees need to understand the objectives, activities and outcomes of this work to ensure it aligns with their stated climate policies.

Looking ahead, LCP urged master trusts to prioritise three actions to ensure the fundamentals of climate policy advocacy are in place.

Trustees should first clarify and make their climate policy positions more visible.

They should then strengthen governance and oversight of climate engagement with policymakers, including where advocacy is delegated, to ensure activity and outcomes are reviewed at board level.

Finally, LCP asked master trusts to be more transparent about their climate advocacy, including the nature and results of key policy interactions.

LCP partner, Nigel Dunn, warned that climate change is one of the “biggest systemic risks” facing investors and that policy engagement needs to reflect that.

He noted that, as policymakers gathered recently at COP30 to plan the transition to a net-zero global economy, master trusts are “well placed to play a larger role in shaping the climate transition because of their natural influence across the market and their position as
credible long-term stakeholders”.

LCP consultant, Natalie Porter, added that it is encouraging to see growing awareness of the role climate policy advocacy plays in the master trust market.

However, she stated that while there is now a clearer recognition that engaging with climate policy is essential rather than a “nice to have”, more work is required to strengthen frameworks, governance and transparency so that master trusts can "fully realise" their influence.

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