Work and Pensions Committee to revisit fiduciary duty concerns

The Work and Pensions Committee (WPC) has announced plans to hold a follow-up session on its 2021 pension stewardship inquiry, to consider whether changes to fiduciary duties are needed.

The WPC’s upcoming one-off hearing will look to explore trustees’ fiduciary duties in relation to pension investment decisions, with a particular focus on how climate risk is considered and whether changes to fiduciary duties are needed.

The committee previously held an inquiry to look at how the government’s approach to pension scheme stewardship can inform, and should be informed by, approaches taken internationally, ahead of COP26 in 2021.

During this inquiry, the WPC heard mixed views as to whether a review of fiduciary duty is needed amid the climate emergency, with industry experts also highlighting the need for an international consensus on climate disclosures.

The committee's final report concluded that there should not be a change to trustees’ fiduciary duties, instead outlining a number of other recommendations, including calling on The Pensions Regulator to develop greater net-zero guidance for schemes.

The upcoming hearing will act as a follow up to this report, to explore whether changes to fiduciary duties are now needed given recent market changes.

The first panel will feature organisations with a focus on sustainable investments before the committee goes on to question pension scheme representatives.

Questions are expected to explore the different views on whether changes to duties are needed and touch on developments since the committee’s report, including the impact of mandatory climate-related reporting for pension schemes and the Financial Markets Law Committee report.

The committee said that witnesses could also be asked about climate change scenario analysis and whether current models provide a suitable basis for investment decisions.

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