By Natalie Tuck
“Local Authorities have been given new guidelines from the Department for Communities and Local Government regarding ESG investments.
In order to comply with the guidance, administering authorities of pension funds must take proper advice. They should also explain the extent to which the views of their local pension board and other interested parties who they consider may have an interest will be taken into account when making an investment decision based on non-financial factors and must explain the extent to which non-financial factors will be taken into account in the selection, retention and realisation of investments…
Commenting, UKSIF chief executive and GSIA member Simon Howard said: “We welcome the requirement for funds to have a policy on ESG and stewardship. However, we remain concerned that funds ability to invest may be impacted by the requirement that policies are in-line with UK foreign policy. We are also very concerned with the power of direction, whereby the Secretary of State can direct a fund to make changes to its investment strategy, force it to invest in specific assets and transfer the investment functions of the administering authority to the Secretary of State or a nominated person. Once again we call on the Secretary of State to clarify this power will only ever be used where an authority has breached its fiduciary duty.””