06 August 2019
Sackers' guide for pension schemes on implementing environmental, social and governance (ESG) factors in their investment strategy was praised by awards judges as "practical thought leadership that could help to move the dial".
ESG and climate change for pension funds – putting the law into practice, which was published by Sackers in March, is the third in a series of guides aimed at pension fund trustees for defined benefit (DB) and defined contribution (DC) schemes of all sizes.
It aims to set out a "clear and detailed" action plan for schemes to select the appropriate approach to integrating ESG into their investment strategy, the pensions specialist law firm said.
Stuart O'Brien, a partner at the law firm and lead author of the report, said engagement with ESG issues "has exploded over the last twelve to 18 months, particularly among pension schemes," but much progress remains to be made.
"Larger schemes, tend to be quite far along their journey of ESG integration and proper consideration of ESG risk. But we have started to see a real difference over the last 12 months in how many smaller schemes are grappling with these issues.
"Within our paper, one of the things we got a lot of positive feedback on was an 'action plan' table at the back, which outlined practical steps that every trustee board can take to start the integration of ESG and climate risk into their investment approaches," said O'Brien.
The guide summarises relevant legal developments in the UK and EU.
It also examines how to prudently assess risk in line with fiduciary duty, noting the difference in approach for DB and DC schemes – something that is too often overlooked, Sackers said.
"Trustees have significant influence as institutional investors but have not always been the quickest to integrate sustainable investment within their investment strategies," it added.
O'Brien aims to further develop work in this area in coming months in his role as chair of a UK government-appointed pension industry working group on implementing the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).