The UK is leading the way on ESG-driven legislation within the pension industry, according to minister for pensions and financial inclusion Guy Opperman.
Speaking at Corporate Adviser’s second ESG forum, the DWP minister pointed out that the UK was the first to legislate for the Task-Force for climate related financial disclosures (TCFD). These new rules were included within the Pensions Scheme Bill and expected to be on the statute books by the COP26 meeting, due to be held in Glasgow in November.
Opperman says this will create opportunities for the asset management and pensions industry, as well as City of London, when it comes to managing assets, for domestic and overseas pensions funds.
Opperman says he has seen first hand that the UK leadership on this issues “had been recognised across Europe”. He pointed out that development of ESG strategies in the US had also been hampered by the Trump presidency.
He adds: “We are looking to make pensions safer, greener and better. This though won’t be done through divestment. My clear message is that we need better stewardship, where schemes and asset managers have proper voting strategies and fully understand their investments.”
For this reason Opperman stressed he thought it imposing, for example introducing net zero targets – would be a “disaster” for the industry. He said: “Schemes would simply dump their stocks. We want organisation to find the pace at which they can move towards net zero, some will move faster than others.” He said more effective stewadship would be more effective in transitioning towards a greener economy.
To achieve this he said there needed to be concerted effort across all parts of the pensions industry including providers, trustees and asset managers.
However he admitted there were laggards within the asset management industry when it came to taking their stewardship roles seriously particularly in relation to ESG issues.
“The industry needs to move into the 21st century. The idea that some asset managers do not disclose their investment holdings to trustees is an anathema to me.
Opperman also called for consolidation in the industry to move faster. “I genuinely think there needs to be fewer and bigger schemes.” He added that this would require discussion and debate across the industry.
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