Two thirds of companies now expect pension scheme investments to include environmental, social and governance (ESG) criteria according to new research from Buck.
This represents a huge shift in attitudes. Similar research undertaken four years ago found just 28 per cent of companies were calling for ESG criteria in their pension scheme investment choices. Today this figure stands at 67 per cent.
Buck says this trend reflects a wider changes, as companies continue to develop their corporate social responsibility policies and seek to promote cultures which embrace diversity, equity and inclusion. It adds that the UK has been one of the first countries to embrace recommendations of the Taskforce for Climate Related Financial Disclosures (TCFD), which has helped sharpen focus on ESG matters.
These latest findings are included in Buck’s white paper on employer attitudes towards DC pension schemes.
Support for ESG provisions was high among respondents and 44 per cent said that the default fund should incorporate ESG principles. Meanwhile 60 per cent of respondents said members should also be able to choose investment options which reflect their religious or social beliefs.
Buck benefits consulting leader Mark Pemberthy says: “Support for responsible investment has strengthened significantly, up from 28 per cent of respondents in 2018 to 67 per cent in 2022. It’s encouraging to see that workplace DC pension schemes in the UK are taking steps to reflect this changing sentiment.
“Communicating ESG-related activity can also be a fantastic way to increase engagement among scheme members. Pension schemes can use front-page news, like climate change, to link the real world impact of their investment strategy, making it more tangible for members. Tech-enabled impact and voting tools are a fantastic way to bring this to life, boost engagement and get real insight on what is important to pension scheme members.”
