Most employer schemes don’t embrace ESG investments
For employers and intermediaries only.
Just one in ten employers believe their pension offering has actively embraced ESG investment options, according to research by Howden Employee Benefits & Wellbeing.
The research revealed just over 9% of respondents said their pension scheme is already strongly aligned with ESG requirements, while just 13% said their scheme is taking steps to understand and embrace ESG investments.
More than half of respondents (57%) revealed they did not know the current position of their scheme in relation to ESG investments.
This comes after regulations came into force in October 2019 which require schemes to set out their policy on financially material investment factors - including ESG considerations - in their statement of investment principles.
Howden suggested employers should also"be more aware of ESG pension scheme investments to avoid potential reputational damage".
Head of benefits strategy Steve Herbert said,"The reality is that the UK public is becoming increasingly aware of ESG investment issues.
"[It is a subject] that can spark fierce emotions in people. So it follows that we are likely to see many more challenges to pension schemes with regard to investments that are not seen as environmentally or socially acceptable."
He added,"Employers need to understand that, regardless of where the legally required investment duties may actually rest, there is an intrinsic and very public link between the sponsoring employer and its pension scheme offering in the minds of members, employees, customers, and the media.
"We urge employers to become more involved in, or at least aware of, their pension scheme's investment decisions with ESG guidance in mind."