One in 10 believe their pension scheme investments align with ESG best practice

1 in 10 pension schemes investments align with ESG best practices

Less than one in 10 (9%) employers believe that their pension scheme investments align with environmental, social and governance (ESG) factors, according to research by Howden Employee Benefits and Wellbeing.

Rules introduced in October 2019 mean that pension scheme trustees are to required to outline their policies on financially material investment factors, including considering ESG considerations. However, the survey of 141 respondents found that 18% had not yet considered this investment measure, while 59% were personally unsure of their scheme’s current position.

Only 13% of respondents stated that they were currently taking steps to embrace ESG investments.

Steve Herbert, head of benefits strategy at Howden Employee Benefits and Wellbeing, said: “The reality is that the UK public are becoming increasingly aware of [ESG] investment issues. ESG captures a really diverse group of concerns, including hot media topics such as plastics pollution, global warming, animal welfare, ‘gig’ workers, and the #MeToo campaign.

“These are subjects that can spark fierce emotions in people. So it follows that we are likely to see many more challenges to pension schemes with regard to investments that are not seen as environmentally or socially acceptable.

“Employers need to understand that, regardless of where the legally required investment duties may actually rest, there is an intrinsic and very public link between the sponsoring employer and its pension scheme offering in the minds of members, employees, customers, and the media.

“It follows that an ill-judged pension scheme investment decision can be extremely damaging for the reputation of the sponsoring employer. We would therefore urge employers to become more involved in, or at least aware of, their pension scheme’s investment decisions with ESG guidance in mind.”