Pension trustees suspicious of ESG link to performance

Nearly half of trustees think there is insufficient evidence to show conclusively that ESG factors affect returns

Nearly half of British pension trustees (48 per cent) say they still believe there is a lack of evidence that ESG issues are linked to the financial performance of investments.

That was the headline finding from the 2019 ESG Survey from law firm Sackers, which also found that trustees are seeking greater availability of “jargon free” advice to guide them through the flood of ESG products and services which have been launched in recent years.

A third of the 102 pension scheme trustee surveyed by UK law firm Sackers in its annual ESG poll, said they had a “lack of time and/or resource” to adequately consider the products and services on the market, while 18 per cent thought there was a lack of clear sustainable investment advice.

“Trustees are under pressure to achieve and demonstrate compliance with a growing list of requirements to increasingly tight timeframes,” said Stuart O’Brien, a partner at Sackers.

“Despite these broader concerns, there was a clear recognition of the importance of ESG and climate issues to pension scheme investments from respondents, whose trustee boards are working hard to comply with their fiduciary duties and achieve the best outcomes for their members.”

O’Brien said that corporate advisers have a “significant and ongoing role” in supporting trustees through these regulatory changes, especially as changes in a scheme’s investment strategy, and subsequent material changes to its investments, could take time to achieve.

Despite a third of trustees saying they had insufficient time to weigh up the existing ESG products in the market, 28 per cent said that there is a lack of products available that meet their needs.

The full report is available here.