TPR: Trustees must wake up and smell the coffee on ESG

Helen Morrissey
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TPR: Trustees must wake up and smell the coffee on ESG

The Pensions Regulator has warned trustees against complacency when assessing environmental, social and governance (ESG) issues within portfolios.

Speaking at yesterday's Professional Pensions Defined Contribution conference the regulator's executive director for regulatory policy Andrew Warwick-Thompson pointed to recent Professional Pensions research that showed these issues are still being widely ignored.

The research conducted among 101 trustees, scheme managers and pension professionals - found more than half (53%) did not see climate change as a financially material risk to their own or their clients' portfolios.

Furthermore only 18% of those who answered the question thought trustees should be legally obliged to take ESG issues into account.

Warwick-Thompson warned against such attitudes and pointed to the regulator's guidance on ESG.

"With regards to ESG our guidance is clear that we expect trustees to take ESG issues into account when assessing portfolios over the long term," he said. "It is also worth noting that if the revised Institutions for Occupational Retirement Provision directive (IORP II) comes into effect then it will be a legal requirement that trustees take these issues into account."

He continued: "I would urge any trustee or asset manager out there who still thinks these things don't matter to wake up and smell the coffee. We need to guard against complacency here."

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