Opperman pushes 50 largest funds to lead way on climate change

The Hexham MP contacted 50 schemes, representing half the retirement assets held in trust in the UK, to reinforce recent regulation changes on environmental, social and governance considerations.

As of the start of this month, trustees of all schemes must outline their ESG policies, including some specific risks such as climate change, in their statements of investment principles. Further regulations to come will then require them to report on how they have acted on these beliefs.

Previous research has shown fiduciaries to be well preparedfor the change in regulations, but the minister sounded a warning that some schemes are not going far enough.

Mr Opperman said: “Pension funds are a powerful weapon in the fight against climate change. Despite some good work by a number of schemes, some are not acting. We need urgency on this vital issue from trustees and investment managers.

“New regulations came into force last week, I’m demanding that the remaining pension schemes and the fund managers they appoint stop shuffling their feet. They must meet their responsibilities to savers now and in the future, and to protect the future of the planet.”

The minister's letter stressed that ESG risks are no different from any other that trustees and members are exposed to - putting to bed the still-prevalent idea that responsible investment is a question of ethics. He asked to see the relevant sections of the schemes' SIPs when they are produced, in order to monitor progress.

Mr Opperman suggested that whatever fund structure assets are held in, and whether or not they are actively or passively managed, schemes should have a policy on stewardship for the companies they own. He also reminded trustees of the need to develop a policy on how they take into account member views.

“It is part and parcel of trustees’ fiduciary duty to take account of these risks when setting out investment strategy and to explain that clearly to investors,” he said.