UKSIF response: DWP consultation on Trustees and governance, building a stronger future
We welcome the opportunity to respond to the Department for Work and Pensions (DWP) consultation on ‘Trust-based pension schemes: Trustees and governance, building a stronger future.’ Given the ongoing challenging geo-political environment, increasingly complex environmental and social context in which UK pension scheme trustees operate, and expansion in trustees’ responsibilities in recent years, the consultation from DWP is timely and very welcome.
Our response below draws on our ‘Unlocking UK pension capital for sustainable growth- Recommendations from UKSIF’s pensions review’ published in April 2025, as well as our previous response to the DWP’s call for evidence. UKSIF’s ‘pensions review’ outlined a series of policy recommendations on behalf of our asset owner network, aimed at putting the UK’s pension assets to work more effectively in the wider economy to drive positive outcomes for pension savers, while also providing benefits for the environment and society.
We focus on a subset of the consultation questions most directly relevant to UK trustees’ capabilities and understanding of sustainability-related risks and opportunities, such as climate change and other systemic risks. We express our broad support for the recent direction of travel of policymaking aimed at strengthening trustee governance, including in relation to financially material sustainability issues.
Summary- main points in UKSIF’s response
- The role of policy in addressing barriers to good trusteeship: We note a number of barriers in our response in relation to consideration of systemic risks, such as practical understanding and capacity, complexity in the reporting landscape, and uncertainty over fiduciary duty. With expectations on trustees continuing to quickly evolve, we would like to see regulators, including TPR, continue to evolve existing guidance over time to support trustees fulfil their legal duties and consider climate risk as part of this.
- Future guidance and support for trustees: Future iterative guidance for trustees- for example through updates to TPR’s existing Trustee Toolkits and other materials- should more directly incorporate a range of systemic risks beyond climate change, such as nature loss, human rights issues, and artificial intelligence. These pillars could be extended over time to include other systemic risks, with the overall objective to promote a good-quality ‘minimum baseline’ of awareness and understanding on these risks among trustee boards.
- Clarifying fiduciary duty in regard to systemic risks: We continue to identify issues relating to trustees’ interpretation of fiduciary duty in the context of growing recognition of the financial materiality of climate change and other systemic risks. We hope to see government’s upcoming statutory guidance provide further certainty and confidence for schemes, including those considering a range of sustainable and responsible investment approaches and more broadly investments in private markets in the UK.