On the go: The Investment Consultants Sustainability Working Group has launched a guide to help trustees in assessing their investment consultants on climate competency.
The document sets out five themes against which trustees should expect consultants to demonstrate their climate competence.
These themes are company-wide climate expertise and commitment, individual consultant climate expertise, tools and software (to support climate-related risk assessment and monitoring), thought leadership and policy advocacy, and assessment of investment managers and engagement with them.
Examples of ‘positive’ and ‘best practice’ indicators are proposed for each theme to help trustees assess their consultants in each area, the ICSWG stated.
The group is a collaboration between 17 companies formed in 2020, with the goal of taking action to support and accelerate sustainable investment initiatives in the UK.
The guide was developed in collaboration between all 17 member firms with input from ShareAction, the Pensions Regulator and the UN Principles for Responsible Investment.
According to the working group, the document is a practical response to the 2020 Pensions Climate Risk Industry Group consultation, which recommended that pension scheme trustees require their investment consultants and asset managers to demonstrate climate competence.
According to Ian Gamon, partner at LCP and member of the ICSWG’s regulation team: “Climate change is fast becoming the defining issue of our time and trustees of pension schemes need to know their advisers are on the front foot with this issue.”
Luba Nikulina, global head of research at Willis Towers Watson and co-chair of the working group, noted that the indicators are “deliberately stretching with the aim of raising investment consultants’ standards, and it should be acknowledged that some of these indicators will be aspirational”.
“However, this is an important step towards developing good practice and practical guidance for schemes, in particular those seeking to align with the recommendations of the Task Force on Climate-related Financial Disclosures,” she said.
Aon, Barnett Waddingham, bfinance, Buck, Cambridge Associates, Cardano, Hymans Robertson, Isio, LCP, Mercer, MJ Hudson Allenbridge, Momentum, Redington, River and Mercantile, SEI, Willis Towers Watson and XPS Investment are the member companies of the ICSWG.
