The UK Sustainable Investment and Financial Association (UKSIF) has called on the government and regulators to seek ways to “significantly upskill pension scheme trustees” in their understanding of sustainability-related risks and opportunities.

In its Policy Vision report, the group argued that upskilling would help schemes have policies in place to manage these risks and opportunities and better safeguard pension savers.

It also highlighted support from its members for proposals that would ensure at least one trustee with expertise on environmental, social and governance (ESG) issues is on all trustee boards and independent governance committees above a certain size.

In addition to this, it stated that members were also supportive of proposals to integrate responsible investment information into the materials shared with the wider public by the Money and Pensions Service, as well as further consolidation of smaller schemes to “bolster understanding of sustainability".

The group has also come out in support for wider initiatives seeking to promote better standards among schemes, such as a Council of UK Pension Schemes recommended by Treasury’s Asset Management Taskforce.

The report emphasised the need for all actors in the investment chain to continue to work together “at pace” to embed stewardship into their investment process and strategies.

It also stated that it would support policymakers and industry to start considering how the UK can embed ‘double materiality’ into sustainable finance legislation, such as corporate reporting.

The report noted that whilst it is early stages for this, it is a natural step with finance and business increasingly expected to consider the impact of their investment decisions on environment and society.

“Availability of data, and agreeing on common measurement, will be among the challenges in reporting on the broader non-financial impact of investment decisions, but this should not limit a longer-term ambition," it continued.

"UKSIF will lend its support to initiatives seeking to advance progress in this area."

Alongside this, the group has encourage pension schemes to commit to net zero, stating this will increasingly be the expectation of pension scheme members.

It noted however, that this could in turn raise the question of the extent to which fiduciary duties take account of net-zero considerations.

"All distributors and advisers to default funds could broaden the scope of their questionnaires to savers, beyond attitudes to risk, to include specific questions on sustainability preferences," it stated.

"Where appropriate, they should discuss sustainable fund options with members joining a scheme and review this regularly.”

Commenting on the report, UKSIF chief executive, James Alexander, said: “As UKSIF marks our 30th anniversary this year, we should not underestimate the urgency of the ambitious action that must be taken to ensure the UK fulfils its net-zero and sustainability ambitions, and acts as an international leader.

"The government, regulators, and the sustainable finance industry all have a responsibility to act decisively to build a more sustainable future.

"UKSIF’s Policy Vision demonstrates that the UK sustainable finance sector is prepared to play its part and highlights the unique opportunity the government has to enhance the UK’s global leadership on sustainable finance.

"We stand ready to work with government and others to shape the future success of this vital industry and embed the ambitious recommendations we have outlined, from the future of sustainable finance standards to net-zero pathways and biodiversity.”

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