ESG and climate change

Environmental, Social and corporate Governance (ESG) factors in pension scheme investing continue to dominate headlines and trustee duties.

As we look ahead into 2022, pension trustees are facing continued regulatory developments and new deadlines, as well as an increasing impetus to consider the potential impact of the climate crisis on their investments.

The climate-related governance and reporting regulations, the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021, have applied to master trusts and £5bn+ schemes since 1 October 2021. These regulations are being phased in and, from 1 October this year, will also apply to schemes with assets of £1bn+.

Early preparation during the summer of 2022 will be key to meet these deadlines. Read our Hot topic: £1bn plus schemes – are you ready? for a summary of the actions schemes will need to build into their business plans from Q2 2022 onwards.

Sackers is at the forefront of developments in the pensions industry, and is increasingly active in advising on ESG and climate risk issues that affect pensions. ” Legal 500 2023

Keeping trustees up to date with developments

Our 2022 guide, Getting to net zero: A spotlight on the role of pension trustees is designed specifically for trustees who are considering making a net zero commitment. Net zero has become something of a standard for trustees looking to nail their ESG colours to the mast, but it is not always clear what is meant by such a commitment, nor what trustees should be thinking about when deciding whether to make one. It looks good on paper, but what is really involved in the implementation of a net zero commitment? In our latest guide, we consider some of the legal aspects to think about, including fiduciary duties. We also provide a practical slant with contributions from a number of industry experts. Explore the interactive guide here, and download the full version here.

Read all our earlier guides here for a look at how trustee duties have evolved.

At the forefront of the ESG debate

We have been advising on trustees’ legal duties with regard to financial and non-financial factors, including ESG, ‘socially responsible investing’ and ‘ethical’, ‘impact’ or ‘green’ investing for a number of years, and our experts are at the forefront of the debate. Sackers is proud to have played a key part in devising new guidance for pension trustees on managing and reporting climate risks.

The Pensions Climate Risk Industry Group (PCRIG), which is chaired by partner Stuart O’Brien, published the guidance “Aligning your pension scheme with the Taskforce on Climate-Related Financial Disclosures recommendations” on 27 January 2021. Go to our webpage here to download the guidance.

The guidance assists trustees in applying the new climate change governance requirements underpinned by the Taskforce on Climate-related Financial Disclosures (“TCFD”) recommendations. You can find details of the new climate change governance requirements here.

Recent experience

  • Assisting clients with TCFD reports
  • Assisting clients with implementation statement reviews
  • Advising trustees on investment in ESG specific funds, including SFDR Article 8 and 9 funds
  • Reviewing and advising on responsible investment policies and frameworks
  • Providing trustee training

How we can help

We advise on the development and implementation of ESG strategies consistent with trustee fiduciary duties and the development of trustee ESG and engagement policies and climate-risk integration, including how to document trustee responsible investment policies and related wording for a scheme’s SIP and annual implementation statements. We also provide ESG training for trustees and pension scheme providers.