UK’s new ESG pension rules are just the first step: PLSA
New disclosure rules relating to UK pension funds’ consideration of environmental, social and governance (ESG) factors and engagement with investee companies should be seen as a first step in an “ESG journey for trustees”, according to the industry’s main trade group.
Under the changes, which come into effect tomorrow, trustees must outline their approach to engagement with and voting of their shares in investee companies, and how they take account of financially material factors, including ESG and climate change considerations, in investment decision making.
The changes reflect regulatory updates from the Department for Work and Pensions (DWP) in 2018. Further changes to the investment regulations for occupational pension schemes were made this year in order to implement the EU’s revised Shareholder Rights Directive II.
Caroline Escott, policy lead for investment and stewardship at the Pensions and Lifetime Savings Association (PLSA), said: “The PLSA supported the DWP’s work to better help trustees consider ESG and stewardship approaches, but we must remember that this is the start of the regulatory journey and not its final destination.”
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