PLSA sets up working group ahead of October ESG statements deadline

Working group will assist schemes in their stewardship reporting duties ahead deadline set by the UK government

The Pensions and Lifetime Savings Association (PLSA) has established a working group to assist schemes in their stewardship reporting duties ahead of an October 2020 deadline set by the UK government

In 2018 and 2019, the Department for Work and Pensions (DWP) made changes to the Occupational Pension Schemes (Investment) Regulations 2005, which require trustees to disclose how they have considered ESG, stewardship and engagement in their investment approaches and by October 2019 trustees were required to initially document their approaches in their Statement of Investment Principles (SIP) and publish online.

Furthermore, in this coming October trustees of DC schemes will be required to publish ‘implementation statements’ explaining how they have implemented their SIP policies, including on ESG and stewardship, as well as provide further information in their SIPs on investor engagement.

The 2019 changes to the Investment Regulations also require DB schemes to report annually on the implementation of their policies around voting and stewardship behaviour from 1 October 2021.

In response, the PLSA has set up the industry group to aid schemes in this next step by helping them to get both clear and consistent information from asset managers on their voting behaviour, and providing guidance on communicating how they have implemented their responsible investment and stewardship approaches.

Chaired by PLSA policy board member Laura Myers, the group is made up of scheme investors, professional trustees, investment consultants, asset managers and legal advisers, while a stakeholder group made up of key industry organisations, government departments and regulators will also be supporting the work.

It will produce two documents in time for summer trustee meetings; a voting behaviour template and ‘pack’ for asset managers to fill out so that trustees can better compare and contrast engagement and voting behaviour, and to make it easier for trustees to produce their own disclosures, and secondly, a step-by-step guide for schemes to help them achieve good practice on their implementation statements and responsible investment communications.

Myers said: “Many schemes are at the start of their journey when it comes to ESG and stewardship issues and after taking the time last year to document their policies they may now feel confused by the reporting requirements and how this applies to their scheme.

“Providing clear support and guidance will give a helping hand to both DC and DB trustees who are also currently grappling with the challenges of covid-19. ESG issues are rising up the political and social agenda and I’m delighted that our group can help trustees be on the front foot to help improve standards across the industry and provide members with transparency on how their trustees have implemented these policies.”

Commenting on the new legislation Caroline Escott, responsible for policy lead investment & stewardship at the PLSA, said: “Although many schemes are rightly focusing on the ongoing implications of covid-19, we must not lose sight of the new October obligations for many schemes to publicly disclose how they have implemented their ESG and stewardship approaches.

“We have been delighted with the response from industry to this project so far. We believe that working with members from across the investment chain will ensure we produce practical, accessible guidance for schemes which supports them in producing meaningful, high-quality communications on their ESG, stewardship and voting practices.”

The working group is part of a wider PLSA initiative focused on investment and climate change undertaken in advance of the (now delayed) COP26. This year, the PLSA has issued new voting guidelines for investors to hold companies to account on climate change, while the topic was a prominent theme at the organisation’s March conference.

In February, ESG Clarity reported research from survey by asset servicing bank CACEIS found nearly half of UK trustees and pension fund managers are not properly prepared to report on their scheme’s ESG policy.

According to the survey, 43% of pension schemes are ill-equipped to properly monitor and report on their pension schemes’ ESG policy to a high standard.


Natalie Kenway

Natalie is editor in chief at MA Financial covering ESG Clarity, Portfolio Adviser and International Adviser. She was previously global head of ESG insight for ESG Clarity and has been an investment journalist...