13 Mar 2019 2 min read

ESG checklist for trustees

By Simon Chinnery

How can pension trustees prepare for new requirements on the financial materiality of environmental, social and governance (ESG) factors? Here are five steps to help you navigate the recent Department for Work and Pensions (DWP) regulatory changes

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  1. Build knowledge on the relevant ESG issues
  • “Financially material” considerations cover “environmental, social and governance considerations, including climate change”.
  • ESG issues are not “to do with personal ethics, or optional extras” (as opposed to ethical investing, for example)
  1. Define your investment beliefs and incorporate them into the Statement of   Investment Principles (SIP)
  • What is the scheme’s governance structure?
  • Review ESG policies, risks and opportunities throughout the entire investment process
  1. Review strategy and asset allocation
  • What is the impact on the scheme’s assets and liabilities?
  • What is the impact on the default and self-select investment strategies?
  1. Incorporate ESG issues into the selection and monitoring of asset managers
  • How are asset managers assessed on their ESG activities, including stewardship?
  • Do you know what your asset managers are investing in?
  1. Report publicly
  • Check to see if you are reporting in line with the recommendations of the Taskforce on Climate-related Financial Disclosures.
  • Use this information to engage your members.

For more information, please listen to our DC checklist podcast:

Or watch Mark Johnson, Head of Institutional Clients, Distribution discuss the changes in a five-minute video.

Simon Chinnery

Head of DC Client Solutions, Distribution

Simon is responsible for LGIM’s Defined Contribution Client Solutions, working as a DC specialist in the Institutional client team and with the DC and Investment teams to further develop our investment and retirement strategy. Simon joined LGIM in September 2016 from J.P. Morgan Asset Management where he worked as a senior relationship manager before acting as interim head of Institutional in 2009, then Head of UK DC.

Simon Chinnery