UKSIF has published its response to DWP’s consultation on changes to the Investment Regulations. The consultation followed the Kay Review and the 2014 Law Commission report on the fiduciary duties of investment intermediaries. It aimed to clarify the extent to which fiduciaries, such as pension fund trustees, were able to take into account:
Long-term risk, including ESG and other financially material factors;
The role of stewardship as part of an investment strategy.
In our response we make clear that the Law Commission’s findings should be properly reflected in any changes to the regulations. This includes directive regulations which provide that trustees should take financially material factors into account and permissive regulations that provide that trustees may take non-financial factors into account in certain circumstances. We also emphasised that good stewardship of assets is an important aspect of responsible investment and trustees should develop a meaningful policy on their approach.