Trustees have a statutory duty to monitor the ESG characteristics of their scheme investments. In their online Statement of Investment Principles (SIP), trustees must publish their approach to ESG in stewardship and investment decision-making. And in the Implementation Statement, they must now report on compliance with stewardship-related policies outlined in the SIP.
In an age of shareholder activism, ESG issues come under scrutiny from a range of stakeholders. For The Pensions Regulator, ESG is an important consideration when assessing risks around scheme investments. Close monitoring of ESG issues can mitigate the risk of association with poor business practices.