Trustees that think ESG is ‘purely ethical’ are ‘wrong’ – Opperman

Pension trustees that think environmental, social and governance (ESG) issues are “purely ethical concerns” are “wrong”, Pensions Minister Guy Opperman has said.

Writing in Conservative Home, on Saturday, 10 August, Opperman expressed his delight at being reappointed as the minister responsible for pensions and financial inclusion, before moving on to the topic of ESG.

“For too long, there has been a perception by too many pension trustees that the environmental practices of the firms they invest in are purely ethical concerns that they do not need to worry about. This is utterly wrong and cannot continue,” he wrote.

Opperman highlighted that new ESG regulations being introduced in October, mean that trustees will have to consider the environmental practices of the firms they invest in. He believes the new regulations will give trustees the “nudge” they need to do their part to tackle climate change.

“Our pension funds have exactly what we need to tackle this problem. A lot of capital, an ability to think very long term, and no political agenda. Clearly, if we do not harness the financial muscle of these massive pension portfolios, we are missing a trick,” he stated.

The Pensions Minister thinks that most people saving for a pension want two key things when saving for a pension – a balanced portfolio that produces income for them to live on in retirement, and serve a “higher purpose”.

“That when our pension is invested, it should be invested in an ethical way,” he said.

“We know that the world is facing a climate emergency. We can all see that we are losing the ice pack, endangered species and our tropical forests at an alarming rate. The term ‘emergency’ may sound alarmist, but if we don’t address these long-term problems now, there won’t be a long term.”

Opperman said that going forward, “as part of a balanced portfolio, pensions trustees should be supporting our climate friendly companies”.

“My colleagues in parliament tell me that pensions are not sexy, but this time it could be pension power that is the force for good to address our twenty-first century problems,” he stated.

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