Pension professionals struggling to meet ESG requirements

More than two fifths (43 per cent) of trustees and pension managers don’t feel equipped to monitor and report on environmental, social and governance (ESG) policy to a high standard, according to new research.

A survey from CACEIS found that nearly three quarters (73 per cent) of respondents were also unfamiliar with climate change-related risks.

Trustees have been required to outline their schemes’ approach to financially material factors, including ESG and climate change considerations, since October as part of their Statement of Investment Principles.

Over a quarter (26 per cent) found it challenging to access the right information to help with their pensions scheme ESG policy.

More than half (55 per cent) of trustees and pension managers surveyed believed exposure to ESG-related investments will increase significantly in the next three years, while 58 per cent felt that better ESG integration aligned with the values of their scheme members.

CACEIS managing director, Pat Sharman, said: "While 2019 saw ESG, and with it the improved standards of governance, creep higher on the corporate agenda; now is the year ESG becomes front and centre for UK pension schemes.”

Sharman claimed that applying good climate change and ESG principles “will be important for pension schemes of all shapes and sizes to help manage longer term risks for the benefit of members”.

“As a trustee myself, I fully understand the complexities involved – as a result, we are working with the PLSA for the second year running as an education partner and we’ll focus on helping trustees navigate this challenging landscape,” added Sharman.

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