DB pension scheme trustees are increasingly taking environmental, social, and governance (ESG) factors into account as they make buy-in decisions, according to Hymans Robertson.
Due to rising environmental expectations for members, they are receiving this added focus. According to Hymans, the importance of ESG has never been stronger for risk transfer, with buy-in becoming a more likely conclusion for DB pension plans and growth in this area seems set to continue.
Nearly two-thirds of trustees, or 62 per cent, stated they would be willing to pay a higher buy-in cost in exchange for an insurer with superior ESG credentials, according to survey data from a recent webinar hosted by the company. As insurers start to adhere to new FCA rules1 to provide climate-related disclosures commensurate with the Taskforce on Climate-related Financial Disclosures recommendations, this insurer scrutiny is anticipated to continue (TCFD).
Hymans Robertson head of ESG for risk transfer Paul Hewitson says: “The scale of investment within ESG presents a huge opportunity for the risk transfer market which can materially improve its position within this area and create real change. The willingness of insurers to move towards investing in a greener way must be recognised and this will benefit both pension scheme members and our wider society.
“The indications from our webinar poll, finding that nearly two-thirds of Trustees are willing to pay for better ESG credentials, demonstrate a clear need for insurers to improve what they offer within this area and differentiate themselves in the marketplace. The importance of ESG will only continue to gain momentum and increase in importance to Trustees and the risk transfer market.”