Calls for TPR to include ESG module in trustee toolkit

Speaking on Tuesday at the Association of British Insurers’ annual conference, Daniela Silcock, head of policy research at the Pensions Policy Institute, argued that ESG and climate change are very complex, so “increasing knowledge and understanding among decision makers is going to be necessary”.

She said: “This could be delivered, for example, through some sort of training module in TPR’s trustee toolkit.”

She added that it would make sense to have the regulator as the source of this information since it is both authoritative and reliable.

Silcock also noted that some kind of standardised data source on ESG would be useful for the industry too, since much of the information at present is contradictory.

In order to stop schemes falling through the cracks, she argued that a more “joined-up” approach was necessary.

She said this would start with some integrated goals, where all of the different stakeholders that the PPI has identified can establish a consensus together on what type of objectives they want to have in regard to climate change and other ESG factors, what practical steps are required to achieve these, and dates as to when they will be accomplished.

In the same panel discussion, David Farrar, senior policy manager at the Department for Work and Pensions, noted that the industry needs to look at the ‘S’ factor of ESG through a risk lens.

“It is not about pension schemes picking up the bill so the government doesn’t have to,” he said.

Silcock also noted that the social aspect was very important and had been neglected due to the fact that the environmental part of the acronym got more attention.

The social factors are “less visible” and “more nebulous”, she said, adding that one of the less negative aspects of the pandemic was that it was possible to a see a positive social impact in regard to illness in the workplace and working practices in general.

She added that climate change has received quite a lot of focus, both through policymakers but also social movements around the globe.

The DWP has been very active in this area recently, with its latest consultation, published in January, proposing to broaden the scope of climate risk analysis to cover not just the environmental impact of pension schemes’ portfolios, but also sponsor covenants and actuarial valuations.

However, Silcock warned: “Schemes are still not engaging with ESG and climate change in a meaningful way.”