PLSA AC 2020: Trustees urged not to be 'frightened' of ESG member comms

Industry experts have urged trustees to create a two-way dialogue around environmental, social and governance (ESG) issues with scheme members, emphasising the need to go above mandatory communications.

Speaking at the PLSA Annual Conference 2020, Lane Clark and Peacock (LCP) head of responsible investment, Claire Jones, called on trustees to create a "common understanding" with members on ESG topics.

She urged trustees to use the dialogue with members as an "opportunity" to test communications, and understand what members understand and what they would like to see from their pension scheme.

She continued: "I do think that ESG has the potential to be a really powerful tool to get members more interested in their pension scheme.

"We know that members care about a lot of ESG topics, you just have to look at the press to see surveys coming out telling you about people concerned that climate change is a very serious problem.

"Topics like diversity, tax dodging - they’re all really topical and I think there are ways in which you can tap into that interest and help members to see the relevance of those to their pension scheme investment, and using that as a tool to get them more engaged."

However, she acknowledged that "quite a lot of trustees" are nervous about communicating ESG topics due to concerns over the potential member reaction.

This in turn has seen some scheme trustees wanting to delay communications until they’ve got better developed ESG policies and practices, and hence more positive things to tell members.

However, Oxfordshire County Council head of pension fund, Sean Collins, urged trustees not to be “frightened” of communicating on ESG issues with members.

In a poll conducted during the session, the majority of attendees (84 per cent) had communicated with members on ESG topics via statutory documents, such as a statement of investment principles, whilst a further 53 per cent had used articles in member newsletters or website.

However, just 19 per cent had undertaken survey member views, whilst 14 per cent had used member-focused reports, and 5 per cent had taken no steps to communicate with members.

Collins noted that the reliance on statutory route was not a surprise, describing the statutory framework as a “god-send” as it has given the industry a framework on how to communicate.

He emphasised that frameworks, such as the TCFD recommendations, have provided consistency, allowing schemes to put together consistent information from fund managers, and provide a consistent messages back to members in turn.

“To a certain extent, I don’t mind if it’s right or wrong," he added, urging industry bodies such as the PLSA to continue developing such frameworks, and equally, calling on funds to use them.

Jones also acknowledged that many schemes were still at an early stage, and have not yet moved past the mandatory minimum to look at more accessible communications.

However, she clarified that it is a "mistake" to think that statutory documents such as implementation statements should be the primary vehicles of communication.

She explained: "I would start with something much simpler, like an article in the member newsletter or a short video on the schemes website, and try to find a more accessible way of bringing these topics to members, and then by all means link to the longer statutory documents after that."

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