Pressure on pension schemes to give environmental, social and governance factors (ESG) more attention continues to build from government, regulators and savers.

The Pension Schemes Bill will require trustees to consider, in-depth, how climate change will affect their pension scheme and investments and to publish information relating to the effects of climate change on the scheme.

Trustees need to act now so they’re prepared. Already, they must publish a statement of investment principles (SIP) setting out their policies on financially material ESG considerations (including climate change) and their policies on stewardship.

This should include when and how they plan to engage with investment issuers or managers on matters including risks and social and environmental impact. Trustees must also publish their SIP online.

Trustees will also need to publish an implementation statement describing whether certain policies in the scheme’s SIP have been followed, and the trustees’ voting behaviour.

There’s no stepping away from the questions raised by climate change. They’re integral to good scheme governance and cannot be ducked.

So, my advice to trustees? Read the PLSA implementation statement guidance and build capacity in this area if you haven’t already.

You will be better placed to understand what climate-related issues mean for your scheme – and better able to make decisions that contribute towards good savers outcomes.

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