On the go: The Pensions Regulator has updated its DC investment guidance to incorporate new regulations on environmental, social and governance risk coming into force from October 2019 and October 2020.
Trustees must make their statement of investment principles freely available on a website from October 2019. From October 2020 trustees must produce an implementation report that explains how they have followed and acted on the investment policies outlined in the SIP.
The SIP, which trustees of trust-based occupational pension schemes with at least 100 members are required to prepare and review at least every three years or after any significant change in investment policy, must now include the trustees’ policies on “financially material” considerations.
These include climate change, stewardship of investments, such as exercising rights (including voting rights), and engaging with activities in respect to the investments. The SIP must also state the extent to which members’ views, including ethical, social and environmental, are considered when planning investments, as well as detailing arrangements with asset managers.
David Fairs, executive director of regulatory policy, analysis and advice at TPR, said: “Climate change is a core financial risk that trustees will need to consider when setting out their investment strategy. They will be obliged to show how they are taking this and other financially material considerations into account over the lifespan of investments.”
Guy Opperman, minister for pensions and financial inclusion, said: “I welcome TPR’s updated guidance, which follows the government’s game-changing regulations clarifying and strengthening pension scheme trustees’ ESG responsibilities.”
Vassos Vassou, a professional trustee at Dalriada Trustees, added: “As stewards of pension assets we can affect how companies act. Indeed, we have an obligation to our members and to society at large to provide effective governance and hold companies to account.
“With climate issues becoming front of mind, we need to be conscious of what our members want from their investments and act responsibly on their behalf.”
