Pension funds are under more regulatory pressure to act on ESG – particularly the climate change aspect – and their powerful advisers have a huge leadership role to play.
The pensions and investment consulting industry in the UK should already be feeling the pressure since two organisations – one representing trustees and the other campaigning for sustainable finance – called for consultants to offer a minimum level of ESG services to pension schemes, partly to support schemes to meet tougher political pressure.
At a minimum, consultants should train all their client-facing staff in ESG risks, not just those who are in dedicated responsible investment groups. Firms should even have ESG targets for staff, including at the most senior levels. Funds Europe research offers some insight into how closely some of the largest consultancies are aligned with these minimum requirements.
The key for pension schemes is to see that basic ESG services – such as fund manager ratings that include an ESG score – form part of their advisers’ basic package of services and are not billed for separately. Consultants are crucial to the mainstreaming of ESG.
Nick Fitzpatrick is group editor of Funds Europe
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