A Changing Climate: Update

A changing Climate Report: Progress Update

A lot of progress has been made since PLSA published its report A Changing Climate: how pension funds can invest for the future. The report, based on a series of roundtable conversations with its members, represented a system-wide assessment of the challenges facing pension schemes and their service providers, and set out a list of recommendations for overcoming these challenges.

Below is a brief update on the progress made against each recommendation.

Recommendation: Joint review of definitions and standards to create common taxonomy.
Progress: The Chancellor announced the creation of a UK Taxonomy last November as part of the TCFD Roadmap. In June the Government announced The Green Technical Advisory Group (GTAG) will oversee the Government’s delivery of a “Green Taxonomy” – a common framework setting the bar for investments that can be defined as environmentally sustainable.

Recommendation: TCFD should apply to all issuers of debt & equity, banks asset managers & insurers.
Progress: The Government Roadmap committed to rolling out TCFD across the investment chain. There have been a number of consultations already this year, including BEIS proposals for premium listed companies. The FCA has opened consultations on mandatory TCFD reporting for asset managers, life insurers and FCA-regulated pension providers. Further consultations are planned over this year and next.

Recommendation: Support measures to increase equivalence of climate reporting or regulatory obligations from the top to The bottom of the investment chain.
Progress: There has been good progress in many quarters, including from the IFRS, BEIS, TPR and the FCA.

Recommendation: Encourage more industry-led ESG training and education.
Progress: We have supported increased training and education across the sector. This has included:

  • Launching a PLSA ESG conference
  • Support for strengthening ESG reporting in TPR’s Trustee Toolkit and Climate Strategy.
  • A PLSA RI Website Hub, webinars and guidance materials.
  • Being a member of the LGPS RIAG – which has developed an RI A-Z guide and supporting materials

Recommendation: Work with TPR to ensure guidance for schemes is suitable; that the Trustee Toolkit contains ESG training and that standards for professional trustees are stretching in respect of climate awareness.
Progress: TPR published its first climate strategy earlier this year which included an emphasis on training and knowledge in the sector.

Recommendation: Support the FCA in working to design explicit climate conduct expectations for Investment consultants.
See above.

Recommendation: Work with the International Corporate Governance Network (ICGN) in revising and renewing its Model Mandate.
Progress: The PLSA together with the Investment Association has established a working group to ensure asset owner establish clear intents and this flows through mandates into implementation by managers and other service providers.

Recommendation: Produce guidance, templates and best practice material for members and trustees with regards to areas such as manager reviews, RFPs and DDQs.
This is incorporated in PLSA/IA work.

Recommendation: Develop guidance for members on what good practice expectations ought to be with regard to stewardship services.
Progress: The PLSA published its 2021 Voting Guidelines earlier this year. We have promoted good practice in a variety of means, including specialist sessions on Stewardship at our Conferences. 

Recommendation: Work with industry to find solutions to pooled voting challenges.
Progress: A Government supported Taskforce has been established to find solutions to these challenges. The PLSA is engaging with the work of the group

Recommendation: Promote Stewardship Code.
Progress: The PLSA continues to support the Stewardship Code and promote its use to our members.

Recommendation: Further develop voting guidelines so they have promote climate change beliefs.
See above.

Recommendation: Make case for green gilt.
The Government has committed to launching a Green Gilt. Issuance expected in due course.

Recommendation: Develop principles for asset management funds/products.
Progress: The recently established GTAG will examine these issues and we look forward to contributing to their work.

Recommendation: Explore the feasibility of creating a Pension Quality Mark for ESG.
Progress: At our ESG Conference we launched an RI Quality Mark for consultation.

Recommendation: Build on our work on implementation statements to consider how best to support members in their communications with beneficiaries.
Progress: The PLSA issued further updates to its implementation statement guidance earlier in the year, and published, is developing further materials to support members communicating their RI activities.