Four more investment consultants have pledged to ensure UK pension scheme trustees are aware of investment guidance on environmental, social and governance (ESG) issues from the country’s pensions regulator.

Sixteen investment consultancies have now signed up to an initiative of the Association of Member Nominated Trustees (AMNT) and the UK Sustainable Investment and Finance Association. It was first announced in September.

Cambridge Associates, Capita Employee Benefits, P-Solve Investments and Xafinity Punter Southall are the latest signatories.

Last year The Pensions Regulator issued guidance for trust-based defined contribution and defined benefit pension schemes, stating that trustees should assess the financial materiality of ESG factors and allow for them accordingly in their investment strategy.

In agreeing to the AMNT’s and UKSIF’s initiative, the 16 consultancies have publicly stated that they consider the guidance to be a major development in TPR’s approach, and that it puts trustees and their advisers under an obligation to react.

The consultancies will bring the guidance to the attention of UK pension fund clients through various routes, for example putting consideration of ESG issues on trustee meeting agendas.

The Principles for Responsible Investment (PRI) is also seeking to harness the power of investment consultants to drive more ESG investing. It has said that most investment consultants and their asset owner clients have so far failed to consider ESG issues in investment practice, and that “the full suite of investment consultants’ service delivery should be reviewed from an ESG perspective”.

It is consulting with asset owners and consultants to develop and “extend the solution set”.

£28bn LGPS pool joins UK-China climate reporting pilot group

The £28bn (€32bn) Brunel Pension Partnership is among investors in a group of UK and Chinese financial institutions trialling reporting of climate-related financial disclosures.

The group has been put together by the City of London Green Finance Initiative, China Green Finance Committee and the PRI.

It will pilot reporting in accordance with the guidelines issued by the Taskforce on Climate-related Financial Disclosures (TCFD), which operates under the auspices of the Financial Stability Board.

According to a statement from the City of London Green Finance Initiative, the other financial institutions participating in the pilot are Aviva, HSBC, Hermes, E-Fund, HuaXia (China Asset Management), ICBC and Industrial Bank.

The People’s Bank of China and the Bank of England will provide input to the group.

The PRI will co-ordinate the investors participating in the pilot and share its expertise on global good practice. The investors are understood to be participating as preparers of the climate reporting rather than as users of corporates’ disclosure.

The pilot was endorsed by the UK and Chinese governments at an event held in Beijing in December.

ESG fund launches

Asset managers’ recognition of the investor appetite for what could be called ESG funds shows now sign of abating, with the beginning of the new year already seeing several launches.

These include:

  • a sustainable global equity fund from Newton Investment Management;
  • a sustainable listed infrastructure fund from First State Investments;
  • two socially responsible exchange-traded funds listed on the London Stock Exchange, run by UBS Asset Management; and
  • a Sustainable Development Goals equities fund, from Union Investment.

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