New Task Force to Encourage Social Investing Considerations in Pension Plans
A new minister-led task force will help pension plans address the risks and maximise the benefits of the "social" element in ESG investment.
Issues with the workforce, supply chains, community involvement, consumer protection, and modern slavery are just a few examples of social factors.
The group, headed by the Minister for Pensions, will help trustees of pension plans and the larger pension sector with some of the difficulties associated with managing social elements, including the identification of credible data and metrics.
Minister for Pensions Guy Opperman said:
"I’m proud of the progress we have made in bringing environmental and climate issues to the pensions agenda, but climate change should not be trustees’ sole consideration.
"Financially material social factors also pose risks and provide opportunities to schemes’ investments, and our task force will help ensure that focus on social factors continues to grow among pension schemes and throughout the investment chain."
The United Kingdom is already a global leader in combating climate risk. 80 per cent of UK pension scheme members will be investing in schemes that measure and report how their investments benefit the Paris Agreement climate target of reducing global warming to 1.5 degrees Celsius over pre-industrial levels beginning in October of this year.
The responses to the government’s consideration of social risks and opportunities by occupational pension schemes Call for Evidence highlighted the need for a proactive approach to embedding social factors within pension schemes’ investment decisions and stewardship policies.
The new commission, which will be led by a minister, will assist in identifying credible data sources and valuable resources for pension systems to assess and manage financially significant societal risks and opportunities. This effort will contribute to the creation of broader principles, measurements, and standards.
DWP continues to urge pension schemes to join the Occupational Pensions Stewardship Council – an industry-backed group striving to move the needle on stewardship by collective participation and sharing best practices – to further drive progress in this area.
The full consultation response - Consideration of social risks and opportunities by occupational pension schemes, can be found on gov.uk.