The UK Investment Consultants Sustainability Working Group has published an update to its Climate Competency Guide for asset owners.
The guide seeks to recognise the role that investment consultants can play in supporting asset owners to stay aware of changing regulatory expectations and the interplay of climate competency with related environmental and social factors.
In updating the guide, the ICSWG received feedback from a broad range of industry stakeholders including Pensions UK, the Pension Regulator and the Trustee Sustainability Working Group.
The guide sets out five themes against which asset owners can ask their investment consultants to demonstrate their competence in advising on climate related issues. Whilst not intended to be prescriptive, the guide sets out examples of typical and leading indicators which can support asset owners in their own evaluation of investment consultants.
Simon Jones, co-chair of the ICSWG, head of responsible investment at Hymans Robertson, says: “As the understanding of climate-related issues continues to evolve, it’s important that asset owners can effectively evaluate the capabilities of those giving them advice. Updating the framework to reflect changing expectations is therefore vital to ensure that evolving best practice continues to be integrated into advice.”
With the first version of the guide published in 2021, members of the ICSWG expressed a belief that reporting standards have significantly improved in the last five years, and the guide has been updated to reflect this.
Regulatory changes since the guide was first released include the introduction of IFRS reporting standards, and mandatory TCFD reporting for UK corporates and asset owners.
Bobby Riddaway, chair of the Trustee Sustainability Working Group, said: “When the Guide was first introduced, I was working in a medium sized consultancy, and the leading expectations set a high bar. It’s encouraging that many of those leading standards are now considered to be business as usual suggesting that practices have improved over the last five years.”
Further members of the ICSWG include Helen Prior, workstream chair and client director at Mercer, and Mette Charles, workstream member and ESG research lead at Aon.