The ESG Toolkit for Pension Chairs and Trustees

A toolkit of resources designed for pension scheme trustees 

Background

Allocating funds to sustainable outcomes

The pensions  industry is in both a position of vulnerability and power, being highly exposed to the risks of an unsustainable future and in a strong place to influence more sustainable outcomes. 

While current initiatives are enabling the pensions industry to take steps in directing finance towards sustainable outcomes, the current trajectory remains unsustainable and much more needs to be done to create a tipping point.

Embedding ESG factors into the investment process of a pension scheme is, similar to a business, essential for effective risk management, innovation and return on investment. It speaks to the heart of fiduciary duty and it also helps address the diverse demands of beneficiaries which, in turn, can lead to better engagement with their pension and also their employer.

An ESG toolkit for Pension Chairs and Trustees

This toolkit of resources supports chairs and trustees of pension schemes identify the practical steps to embedding ESG considerations into their investment decisions, reporting, and engagement across the investment chain. Consisting of practical examples, an ESG maturity map and guidance resources, the toolkit will support trustees in their discussions with fellow trustees, as well as consultants and fund managers, about steps they should take. 

What next

We are currently considering industry feedback on our ESG maturity map.

The toolkit

The toolkit consists of:

  • An ESG maturity map with suggested steps that schemes can take to progress on their ESG integration journey
  • Practical examples of pension schemes to bring ‘what good looks like’ to life
  • Guidance material to highlight the practical steps eg embedding ESG factors into different asset class portfolios

The toolkit is a ‘live’ document, meaning we will be continually adding new resources and best practice stories to it. If you have a great example demonstrating practical steps that trustees can take, then please email Kerry.Perkins@accountingforsustainability.org.

“It is often hard to navigate through the plethora of information to pick out the key practical steps that pension scheme trustees should take to integrate ESG considerations into their investment strategy and processes. A4S’s ESG Toolkit for Pension Chairs and Trusteeshas been specifically written for trustees in mind, to help them with this challenge and support our discussions with fellow trusteesand our members”

Russell Picot, Chair of the HSBC Bank (UK) Pension Scheme and Co-Chair of A4S’s Asset Owners Network

“The events of 2020 have reminded everyone that we live in an uncertain world. The impacts of climate change on infrastructure, like floods and subsidence, create risks for investors. Portfolio managers need to quantify and plan for physical risk to achieve steady long-term returns, but, in the short-term, this work will also connect your pension funds with the public who increasingly demand action on the climate emergency. A4S’s ESG Toolkit for Pension Chairs and Trusteeswill help you navigate through a changing landscape.”

Emma Howard Boyd, Chair of the Environment Agency,and Co-Chair of A4S’s Asset Owners Network

Maturity map

Detailing what good looks like and enabling trustees to assess where they currently are and how they can advance to a leading position.

Practical examples

Enabling trustees to understand the practical steps that peers are taking as well as their ‘top tips’ to taking similar action.

Guidance

A4S guidance on specific elements of ESG integration, including asset classes.