Nearly all (95 per cent) scheme members have said that the majority pension schemes have made no environmental, governance and social (ESG) changes to their portfolios, despite increased focus and regulations on responsible investing.

A survey by the Society of Pension Professionals (SPP) found that 57 per cent of respondents said that most schemes had shown a “genuine interest” in ESG but had made no changes to their investment portfolio.

Furthermore, over two thirds (38 per cent) of respondents said that most clients are only reacting to the regulatory changes as a tick box exercise, solely making changes to their Statement of Investment Principles to comply and not making changes to their investment portfolios.

SPP conceded, however, that the questions asked had “limitations”, as the results were “skewed towards the most common approach”.

The report stated: “If all our members see 60 per cent taking no action and 40 per cent taking action, then 100 per cent of responses would indicate “taking no action” as the most common approach.

“Nevertheless, the fact that almost all our members report that no change to the portfolio is the most common approach they have seen is significant.”

More than a third (35 per cent) felt that financial considerations were either the first or second most important factor in considering ESG.

Survey respondents also highlighted the significant role played by the government and the regulator, with 65 per cent placing one as the most influential, and almost 55 per cent placed one of them in second.

Almost 22 per cent of respondents cited the public as the primary influencer and over 70 per cent placed the public in their top 3 influencers, compared to just 5 per cent and less than 20 per cent respectively for the influence of pension scheme members.

It concluded: “This survey has highlighted that the pension industry appears to be reacting to regulatory and government pressure, as well as to public opinion to some extent, rather than driving the ESG agenda.

“That said, anecdotally there is a growing interest and emphasis on ESG, which gives the impression that perhaps it is just early days.

If enthusiasm for ESG in practice can be embedded across pension professionals and trustees, then regulatory pressure will gradually become less important.

“In the short term, however, the regulatory regime is essential to ensure that ESG is a long-term change and not just a short-term flurry of activity.”

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