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New rules are first step in ESG journey for trustees, says PLSA

The Pensions and Lifetime Savings Association publishes on its website:

“New rules that will change the way pension schemes take account of environmental, social and governance (ESG) factors are the first step of the journey not the end result, the Pensions and Lifetime Savings Association (PLSA) has stated.

The changes – that come into force tomorrow (1 October) – mean that trustees will be required to outline their approach to engagement and voting of their shares in investee companies, as well as including ESG and climate change considerations in their investment decision making.

The rules state that trustees of DB and DC occupational pension schemes with more than 100 members must have set out in their Statement of Investment Principles (SIP) how they take account of financially material factors, including ESG factors and climate change.

The changes reflect DWP’s 2018 updates to the Occupational Pension Scheme (Investment) Regulations 2005. Implementation of the EU’s Shareholder Rights Directive II (SRD II) led to further changes to the Investment Regulations published in June 2019, which will require both DC and DB schemes to publicly disclose information on issues including use of proxy advisers and how they incentivise their asset managers to align investment strategies and decisions.”

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