A taskforce set up by the Department for Work and Pensions (DWP) has launched a consultation on a new guide.

The guide includes 30 recommendations for how the UK pensions sector can better incorporate social factors into investment decisions.

The Taskforce on Social Factors (TSF) consultation aims to help pension schemes address the risks and seize opportunities of the “social” element in environmental, social, and governance (ESG) investing.

The TSF was established in February 2023 and includes representatives from pensions schemes, asset managers, data providers, cross-industry collaboration groups and civil society.

The guide outlines how pension trustees can better consider and incorporate social factors into their investment and stewardship decision-making.

The social factors under consideration range from workforce conditions and supply chains to community engagement, consumer protection and modern slavery.

The guide suggests pension trustees should ensure their asset manager consider social factors and integrate them into their investment strategy and stewardship.

Additionally, it states the DWP should consider formally setting out expectations on addressing social factors, while the Financial Conduct Authority should consider setting out reporting expectations, alongside those required for environmental factors.

Also, asset managers should be able to “demonstrate that they have influenced social outcomes through transparent reporting on engagement, voting and investment outcomes, including any social investment metrics.”

The TSF is requesting feedback on its recommendations from pension scheme trustees, asset managers, regulators, government, data providers, investment consultants, lawyers, industry groups and trade bodies and non-governmental organisations.

Aegon head of responsible investment and TSF co-chair Hilkka Komulainen said: “For pension savers, social factors will influence the world into which they will retire.

“The purpose of the taskforce is to facilitate meaningful change and to help trustees make the best decisions and create stewardship frameworks that will have long-term impact.”

IFM Investors global head of sustainable investment and TSF co-chair Maria Nazarova-Doyle added: “Social factors have not yet enjoyed as much prominence in the pensions industry as climate has had, and it is our hope that this guide will provide useful support to elevate the approach to social factor integration into investment decisions and stewardship across the whole industry.

“We look forward to receiving the industry’s feedback to help shape it further.”

The taskforce is asking for feedback from the industry by Friday December 1st 2023.