Pension scheme investments to scrutinised by government committee

Economy & Politics | South East
UK Parliament

The impact of social factors on pension scheme investments will be scrutinised by the Government as a ‘Call for Evidence’ is launched today.

A 12-week Call for Evidence launched today will seek views on how pension scheme trustees understand social factors and how they are included in their Environmental, Social, and Governance (ESG) policies. Social factors can present a wide range of potential risks to a scheme’s investments, but they can also present lucrative investment opportunities.

The responses will help inform the government on the steps needed to ensure that trustees are better able to meet their legal ESG obligations.

This will help increase policymaker and industry understanding of what is currently being done, and what more could be done, to ensure both the risks and opportunities presented by social factors are adequately considered by pension schemes.

Minister for Pensions Guy Opperman, launching the Call for Evidence, said: “I’m proud of the progress we have made in bringing environmental and climate issues up the pensions agenda, helping make pensions fit for 21st century challenges.

“But climate change should not be trustees’ sole consideration. Financially material social factors also pose risks to schemes’ investments, which is why we’re launching this Call for Evidence to understand what more can be done by industry and policymakers to protect savers.

“By considering the risks – and opportunities – relating to supply chains and communities, employees and business models, local economies and landscapes, investment strategies can better deliver long-term value.”

Industry reaction

Nimco Ali, CEO of The Five Foundation, The Global Partnership To End FGM, said: “The issues of diversity, gender and the empowerment of women are pivotal to global prosperity. Economic justice for women – especially those we work with in Africa – is one of the biggest opportunities we have for unleashing a new wave of investment growth, while, at the same time, reducing violence and discrimination against women and girls such as female genital mutilation (FGM) and sexual violence. It is truly a win-win situation.

“Today’s Call for Evidence will help us to identify opportunities where pension funds not only provide healthy economic returns for investors, but can also contribute to women’s economic empowerment. This review will benefit all of us and I hope it is responded to enthusiastically.”

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