Pension funds reactive and “perverse” on ESG

The Society of Pension Professionals (SPP) has published research based on a recent survey the SPP membership around ESG issues.

The research finds that although schemes are now required to have a policy around ESG, 57 per cent of respondents said that their portfolios had had no change.

Indeed, 38 per cent of respondents are seeing the majority of clients only addressing regulatory change as a tick box exercise, and 35 per cent of respondents felt that financial considerations were either the first or second most important factor in considering ESG.

Recent changes in regulatory requirements are perceived to be the main driver for change, and SSP notes that it would be strange if the Government and the Pensions Regulator were not at the top of the list of drivers. However, the range of responses however show a more nuanced picture.

Almost 22 per cent of respondents cited the public as the primary influencer and over 70 per cent placed the public in their top 3 influencers. Less than 20 per cent cited the influence of their pension scheme members. On this point SPP noted that “it seems perverse for the actions of a pension scheme to be influenced more by the general public, to whom it has no duty as opposed to its members, to whom it has a legal responsibility”.

In summary, SSP believes that the pension industry is reacting to regulatory, governmental and public opinion, rather than driving the ESG agenda, despite the growing interest and emphasis on ESG.

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