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Unlocking real ESG action in pension schemes

We are calling for UK pension schemes to take immediate practical steps by allocating just eight additional hours per year to unlock real progress on two key ESG priorities:

  1. Climate Action

    Significant progress can be realistically achieved by all UK pension schemes by taking three practical steps:

    • Quantify climate risks – each scheme has its own specific risks inherent in its asset and liability profile
    • Identify climate opportunities – there is significant potential to improve returns and manage risk through the period of transition to a low carbon world
    • Implement a Carbon Journey Plan – the ‘how and when’ these risks and opportunities will be managed
  2. Long-term stewardship

    Trustees are the stewards of the assets over the long term, and we believe a real difference can be made by taking the following steps:

    • Policy – set a clear stewardship policy
    • Engagement – review investment managers’ corporate engagement activities and hold them to account on material issues
    • Voting – review investment managers’ voting records on key ESG issues and guide their voting behaviour to be consistent with trustees’ investment objectives

With eight hours per year of effective, action-orientated trustee time (split between training, strategy, portfolio review and monitoring), pension schemes could begin to unlock significant impact and ultimately deliver better outcomes for members.

Two priorities will never be enough but they can be a vital first step. We see these two agenda items as a way for trustees to begin turning ESG aspirations into ESG action without significant time commitment.”

Dave Aleppo | Head of UK Investment Advisory Services

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