PLSA launches ESG guidance group

The Pensions and Lifetime Savings Association (PLSA) has launched an industry group to help produce guidance which will support schemes in getting to grips with the new 2020 Environment, Social and Governance (ESG) and stewardship reporting deadlines and duties.

In 2018 and 2019, the Department for Work and Pensions made changes to the Occupational Pension Schemes (Investment) Regulations 2005, which require trustees to disclose how they have considered ESG, stewardship and engagement in their investment approaches.

The 2019 changes to the Investment Regulations place new requirements on DB schemes to publish their statement of investment principles online by 1 October 2020 and report annually on the implementation of their policies around voting and stewardship behaviour from 1 October 2021.

The PLSA initiative will help schemes get both clear and consistent information from asset managers on their voting behaviour, as well as provide guidance on communicating how they have implemented their responsible investment and stewardship approaches.

To do so, the PLSA has pulled together a cross-industry group of expert participants including scheme investors, professional trustees, investment consultants, asset managers and legal advisers.

The group will be chaired by PLSA policy board member Laura Myers – a Partner and Head of DC at LCP – and will provide a voting behaviour template and “pack” for asset managers to fill out so that trustees can better compare and contrast engagement and voting behaviour, and to make it easier for trustees to produce their own disclosures.

The PLSA will produce practical, step-by-step guidance for schemes to achieve good practice on their implementation statements and responsible investment communications.

Caroline Escott, Policy Lead Investment & Stewardship, PLSA, said: “Although many schemes are rightly focusing on the ongoing implications of Covid-19, we must not lose sight of the new October obligations for many schemes to publicly disclose how they have implemented their ESG and stewardship approaches.”

“We have been delighted with the response from industry to this project so far,” she said. “We believe that working with members from across the investment chain will ensure we produce practical, accessible guidance for schemes which supports them in producing meaningful, high-quality communications on their ESG, stewardship and voting practices.”