Although Ownership Day and other industry initiatives play a vital role in raising awareness of the benefits of ‘active’ asset ownership, policymakers need both to lead by example and create a policy framework which incentivises good asset stewardship.
As part of the campaign, we are engaging with policymakers, regulators and others on the following key campaign ‘asks’:
1) A requirement by The Pensions Regulator (TPR) and other relevant regulators that all large listed and private UK firms report, on a ‘comply or explain’ basis, how their defined contribution (DC) corporate pension plans integrate environmental, social and governance (ESG) factors. This information should be provided in a clear, accessible and easily-available manner on topics including: whether a company’s pension fund has signed up to the Stewardship Code, to what extent their pension funds integrate a particular ESG investment approach or whether they offer a sustainable pension fund option.
2) All public sector pension funds to be required to sign up individually to the Stewardship Code. It is up to our elected representatives and the public sector generally to lead by example when it comes to good stewardship and other responsible investment practices particularly as it is their responsibility to spend – and get the most out of – taxpayers’ money.
UKSIF on a number of occasions proposed and encouraged the MPs’ pension fund (the PCPF) to sign the Stewardship Code, which it did so in 2013. However, out of 100 local government pension schemes (89 in England & Wales, 11 in Scotland) only 21 have signed up to the Stewardship Code individually [House of Commons Library Note No. 1402-035, 9th February 2014]. Several more are part of the Local Authority Pension Fund Forum (LAPFF), a collaborative engagement forum which has signed the Stewardship Code, but it undermines efforts to promote good stewardship if our funded public sector schemes are noticeably absent from the key regulatory initiative to encourage active ownership.
3) Clarification of the legal concept of fiduciary duty to improve investment outcomes through encouraging best practice sustainable investment and stewardship approaches by asset owners. The current interpretation of fiduciary duties of trustees to their beneficiaries is often that ESG issues should not be considered. The current laws should be clarified to encourage ESG investment by asset owners and their intermediaries, including investment managers and consultants.
If you would like to e-mail your MP about these issues, you can do so using our template letter & 5 simple steps here.