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Pension scheme Trustees have to take account of  Environment, Social and Governance issues when formulating their investment principles

Some readers may recall a BBC television series that was broadcast through the 1980s and 1990s which focused on science and technology issues. A recurring theme was the subject of climate change. At the time, I wondered if the impact of the new weather patterns described would ever happen. Thirty years on, we all know it is not fantasy - the global climate is changing faster now that it has in the past 2,000 years.

For Trustees of Occupational Pension Schemes, this issue is also one of the biggest challenges and considerations in designing investment strategies as we consider Environment Social and Governance (ESG) issues.

Who Cares Wins

In 2004, the world’s leading financial institutions were invited by the then United Nations Secretary-General Kofi Annan ‘to develop guidelines and recommendations on how to better integrate environmental, social and corporate governance issues in asset management, securities brokerage services and associated research functions’.

Twenty firms from nine countries with $6 trillion under management (at that time) collaborated through a financial sector Initiative called Who Cares Wins collaborated to deliver a report with their recommendations for the better integration of ESG factors. Their stated overall goals were:

• Stronger and more resilient financial markets
• Contribution to sustainable development
• Awareness and mutual understanding of involved stakeholders
• Improved trust in financial institutions.

In Association with

Source: ‘Who Cares Wins’ UN December 2004

Today, the Irish pensions regulator, while it waits for the Institutions for Occupational Retirement Provision II Directive to be transposed into Irish law, has asked Trustees to consider ‘an appropriate investment structure. This is because the IORP II Directive, which is European Law since January 2019, requires Trustees to have a stated ESG policy.

Investment Principles

Some jurisdictions like the UK will require Trustees to publish their Statement of Investment Policy Principles online to support members’ understanding of their Trustees’ policy, which in many cases has the opportunity to align with their sponsors’ corporate footprint on matters relating to sustainable investments and better governance.

At Trustee Decisions, we recognised the importance of ESG many years ago, and support membership of those organisations where we work collaboratively with peers to support the expansion of sustainable finance. Accordingly, Trustee Decisions is a signatory of the United Nations Principles for Responsible Investment, which aim to incorporate ESG factors into investment decisions to better manage risk and generate sustainable, long-term returns.

For further information, please contact:
James Kavanagh (pictured)
Managing Director
Trustee Decisions
Fitzwilliam Hall
Fitzwilliam Place, Dublin 2

T: + 353 1 806 2750
E: james.kavanagh@trusteedecisons.com