A new cross-department working group taskforce, led by the Minister of Pensions, will be established to identify reliable data and metrics, to ensure focus on social factors throughout the investment chain. Its aim is to support pension scheme trustees and the wider pensions industry manage and assess financially material social risks and opportunities. Invitations to participate in the taskforce will also be extended to financial regulators.
We agree that with a strong focus on climate change in recent developments in ESG, there is a risk that the 'S' and the 'G' get left behind, whereas all financially material factors should be taken into account by pension trustees. We welcome the drive to find meaningful ways to do this.
The taskforce on social factors will lead on the following areas:
1. Identify reliable data sources and other resources
2. Monitor and report on developments with the International Sustainability Standards Board (ISSB) and other international standards.
The new taskforce is an outcome of the DWP’s March 2021 call for evidence seeking views on how schemes approach social risks and opportunities. One of the reported approaches to managing the social factors existing was ‘active ownership.’ Active ownership includes engagement with companies and others involved in the investment chain, as part of a wider stewardship strategy.
The Government consultation response can be accessed here.
We can advise on social factors regarding ESG, stewardship and reporting requirements in relation to pension schemes of all sizes. If you would like to explore this topic further please contact Kate Granville Smith, Heather Musk or your usual member of our pensions team.