The ongoing sustainability journey for UK pension schemes
With over £1.3trillion of investments held in the occupational pension arrangements of over 24 million of its citizens, it’s easy to see why pension schemes are an essential part of the UK government’s drive to net-zero. In terms of wider sustainability issues, however, trust law is slower to respond, leaving pension scheme trustees with difficult decisions in some instances. This article provides an overview of the current state of play.
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Action follows intent
As recently as summer 2019, there was no mandatory requirement for UK pension scheme trustees to have a policy about taking environmental, social and governance issues into account in their investment decision-making. That changed from 1 October 2019, when for the first time the Statement of Investment Principles (SIP) for most pension schemes with 100+ members had to state:
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- trustee policy on taking financially material considerations (including, but not limited to, environmental, social and governance issues) into account in investment decisions;
- the extent (if at all) to which non-financial (eg ethical) considerations are taken into account; and
- trustee policy on stewardship matters.
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