An influential City trade group has urged the UK government to allow pension trustees longer to respond to proposals that will make it compulsory for environmental, social and governance risks to be considered in investment portfolios.
The calls were in response to a consultation paper published by the Department for Work and Pensions on Tuesday, entitled “Consultation on clarifying and strengthening trustees’ investment duties”.
In response to the paper, trade groups claimed that the government had underestimated the time required to respond to what is a complex issue.
Jules Constantinou, president, of the Institute and Faculty of Actuaries (IFoA), said while it is appropriate that pension trustees are called to show they are recognising the financial impact of ESG factors, the government must appreciate the complexity of the proposals.
“For change to be effective, they need clear guidance and reasonable timeframes,” he explained in a media statement. “This is a complex marketplace and funds vary in size so there is no one-size-fits-all solution for trustees to provide policy statements.”
Mr Constantinou said that the IFoA would prefer to see a phased approach to allow the market to explore different options.
He added: “[The] DWP’s explicit mention of climate change as a consideration for trustees is a big step forward. Many of those joining the workforce and being automatically enrolled into a pension will be saving for decades.
“Their investment managers should be considering not just short term financial returns but the impact of their investments on the environment in years to come. This is a crucial part of delivering inter-generational fairness and an area where we believe there is a need for greater consumer awareness and more action by industry.”