PLSA launches new ESG and stewardship guidance for pension fund trustees
The Pensions and Lifetime Savings Association (PLSA) has published a new guide to help occupational pension scheme funds comply with new environmental, social and governance (ESG) requirements coming into force from 1 October and support them in achieving good practice into the future.
Recent changes to the Occupational Pension Schemes (Investment) Regulations 2005 mean it is now vital that trustees of all occupational schemes understand and include ESG factors and stewardship approaches in their investment decision-making. Trustees are at significant risk of breaching their legal and regulatory duties if they do not do so.
This PLSA guide provides practical, step-by-step guidance to help trustees meaningfully consider, design and implement ESG and stewardship approaches. Trustees can also find a further reading list, additional case studies and a complete list of questions for advisers and managers.
Using myth-busters, case studies and questions that trustees should be asking of themselves, their advisers and their asset managers, ESG and Stewardship: A practical guide to trustee duties approaches the regulations in a highly practical way so that trustees can implement policies straightforwardly.
Under the new requirements introduced by the Department for Work and Pensions, if trustees disregard long-term financial risks or opportunities from ESG, climate change and stewardship factors, they will need to justify why this does not harm investment returns or outcomes for their members.
The guide is designed to support trustees of around 30,000 DB and DC pension schemes responsible for managing nearly £2 trillion. It is structured to reflect the typical journey that trustees take to ensure that ESG, climate change and stewardship factors are properly understood, formalised in a relevant policy and, where appropriate, reflected in broader decision-making.
Developed by a cross-industry taskforce in response to significant demand from the PLSA membership, the new guide coincides with pension schemes’ summer trustee meetings and complements further guidance to be published by The Pensions Regulator.