Leading professional trustee firms have formed a new Trustee Sustainability Working Group (TSWG).
The group seeks to improve stewardship practices across the industry, through engagement with fund managers and investee companies, while also seeking to influence regulators and policymakers.
Initially the group has raised questions around the usefulness of some of the current reporting required by trustees, via TCFD reports. TSWG said pension regulations has helped drive the awareness of sustainability, particularly in relation to to climate change, but it added there was now an “over-emphasis on low level reporting” that has “direct implications for the use of our limited resources, especially for small and mid-size schemes”.
The group added: “We support the view that much of the climate scenario modelling across the industry is not decision-useful. The output often seems to be at variance with the science, and we want to support further work in this area to explore why.”
The TSWG says it aims to be action-orientated, with the aim of accelerating good investment practice around sustainability. It will be chaired by Bobby Riddaway of HS Trustees, and the committee will include those working for Dalriada, PI Trustees, IGG, Zedra, Bestrustees, Lawdeb and AMNT. The committee will also include a number of individual trustees and Mike Clark, from Ario Advisory, a guest climate expert.
In a statement the group said: “We want to be action oriented. We have asked ourselves what success might look like. That is not an easy question to answer. But if we can look back in a couple of years and see transition plans developing across the pensions sector, practical solutions for small schemes and richer conversations about risk, then we will know with confidence that our efforts have contributed to that progress.”
Defining its terms of reference it added: “The committee will seek to use its influence and the influence of the organisations which members represent, where applicable and/ or agreed to improve stewardship in relation to both investee company engagement (usually through fund manager engagement), industry standards and policy advocacy. The committee aims to drive better sustainable investment practices across the industry for its key stakeholders, working with schemes, consultant firms, asset managers and regulators.”
