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The report found there to be a lack of consensus regarding how to define and implement ESG considerations, as well as barriers related to the resources available to smaller schemes. However, the report also highlighted that awareness and understanding of ESG was growing, as was the availability of off the shelf products that can make ESG investment more accessible to smaller schemes.

Two years on, awareness and understanding has continued to grow, particularly driven by the increased regulations that have come into force since then. However, there is still some way to go before all schemes are engaging with ESG risk-factors in a meaningful way in order to ensure that their members are adequately protected against long-term risks.

Following on from PPI’s previous work on ESG, this series explores the approaches available to schemes and the opportunities and barriers they may face in choosing and implementing an approach, with the aim of identifying areas where there may be a role for increased support from government and industry to enable greater engagement with ESG considerations.

Recent changes in regulation have strongly encouraged trustees and providers to become more informed about the financial implications of ESG risks. Risks associated with climate change in particular are receiving ever increasing focus, both in terms of policy and society more broadly. However, there are concerns that some schemes are still not necessarily taking a meaningful, long-term focused approach to these risks. While schemes will need to take direct action, a more joined-up approach across the industry will be needed to drive forward progress.

The second publication in the series, ‘Engaging with ESG: Climate Change’, delves deeper into the attitudes and behaviour affecting consideration of climate change in pension scheme investment. 

The climate change report is kindly sponsored by Phoenix Group, Gold Supporters of the PPI.

Click here to download the event write up