There is growing awareness of climate policy advocacy among the UK’s largest master trusts, but further action is required to help meet net zero goals, according to new analysis by LCP.
LCP has analysed climate policies at sixteen master trusts covering £200bn in assets, and assessed these against its views on best practice in climate change policy advocacy.
This best practice set out seven key principles: clear policy views, defined strategies, strong governance, adequate resourcing, diverse engagement methods, stakeholder engagement and transparent disclosure. LCP says these provide a practical framework for master trusts to influence policy effectively in their members’ interests.
The LCP reports set out how well the workplace pension sectors is delivering against these key principles. Finding include:
- Policy Views: Few master trusts articulate clear views on climate policy which are publicly available. Of those that do, they are typically hidden within scheme documents and lack prominence.
- Delegation: Many master trusts delegate policy advocacy to sponsoring companies, which can work well if trustees maintain active oversight and regular reporting. However, oversight quality varies: some boards review quarterly, while others have less visibility.
- Engagement strategies: Most master trusts have broad sustainability frameworks, but few publish distinct climate advocacy strategies. They often focus on company engagement; however, some leading schemes now have clear climate roadmaps and actively support policies to boost low-carbon investment.
- Transparent disclosure: Most master trusts keep internal records of policy interactions, but few disclose them publicly. Even where full disclosure is not possible, summarising key themes, channels, and outcomes enhances accountability and member confidence.
- Collaboration: Almost all master trusts covered by LCP’s analysis participate in initiatives such as The Institutional Investors Group on Climate Change (IIGCC) or UK Sustainable Investment and Finance Association (UKSIF). Where collaboration, particularly through sponsoring companies, is the main route for climate policy engagement, more needs to be done to ensure the trustees understand the objectives and outcomes to ensure alignment with their policies.
- Resourcing: Larger master trusts or those backed by large parent organisations have greater access to sustainability specialists. Smaller or standalone trusts may struggle to dedicate sufficient expertise, though some compensate through strategic partnerships or targeted collaborations.
LCP is urging master trusts to prioritise three areas to ensure the fundamentals are effectively in place.
First, trustees should clarify and publish their climate policy positions. They should also strengthen governance and oversight of engagements with policymakers, ensuring that delegated advocacy is monitored and outcomes reviewed. Finally, they should be transparent about their climate advocacy activity and the outcomes of policy interactions.
LCP partner Nigel Dunn says: “Some of the biggest risks we face today, including climate change, are systemic. Policy makers around the world have gathered at COP30 to find a way forward to a net-zero global economy. Master trusts need to play their part and are well placed to play a larger role in shaping the climate transition because of their natural influence across the market and their position as credible long-term stakeholders.”
Natalie Porter, consultant at LCP, adds: “It is positive to see more awareness of the role climate policy advocacy plays. Across the master trust market, there is now a clearer understanding that policy engagement is essential rather than a ‘nice to have’. To build on this progress, more work is needed to strengthen this area further.”
