Law Commission says Pension Trustees should consider Environmental, Social and Governance issues where material
Law Commission now accepts smaller sized funds are capable of practicing good stewardship of their assets
The UK Sustainable Investment and Finance Association (UKSIF) has today welcomed the Law Commission’s report on fiduciary duties.
Simon Howard, UKSIF Chief Executive, said:
“Our members and others in the investment community have long recognised that the law on fiduciary responsibility was “confusing and inaccessible” as the Law Commission puts it.
We are pleased that the Commission has accepted the case for clarification. In particular we are glad that they make it clear that trustees should consider environmental, social and governance factors where they are financially material. Whilst we would have liked statutory clarification on this matter we look forward to working with The Pensions Regulator and the FCA in ensuring they provide rapid, comprehensible and accessible guidance in this area.
One of UKSIF’s concerns about the Commission’s initial consultation draft was the implication that smaller sized funds were unable to practise good stewardship of their assets. We were happy to take a delegation of members to meet the Commission to discuss this and other matters and are delighted to note that the Commission has accepted our arguments and are asking the Government whether trustees should be required to state their policy on stewardship.
We also welcome the proposed reforms to governance in the fast growing area of defined contribution pensions. These are the pensions of the future and must be properly run.”
Click here to read the full press release.