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Policy led by Guy Opperman during his time as Pensions Minister has seen ESG given particular prominence in the thinking of the UK’s pension schemes. A more sophisticated approach has seen trustees appreciate that ESG as being far more than paying lip service to environmental issues, and trustees now have a deeper understanding about their responsibilities - not just in respect of addressing climate change but also with regard to ethical workplace practices. Crucially, trustees also have an understanding of the benefits of effective governance and the positive impact it has on scheme management

However, applying ESG effectively is not without its challenges. Legislative requirements have become increasingly demanding, and trustees find themselves having to work hard to incorporate ESG effectively in their schemes’ funding arrangements. There are also alternatives open to boards when it comes to effective implementation.

PMI’s 2022 ESG Report serves as a vital guide to today’s trustees. It considers all the issues that trustees are required to address if they are to apply Environmental, Social and Governance principles effectively to the stewardship of their schemes. A range of highly-respected industry professionals has contributed to this report, and their input considers not just the benefits of effective ESG implementation but also the pitfalls to be avoided. Trustees need also to consider how best to apply ESG principles, from the adaptation of traditional stewardship models to the alternatives of Fiduciary Management.

This report addresses the key issues associated with both approaches. The importance of effective member communications is also addressed, and PMI’s report examines routes to achieving this objective that would suit schemes of all sizes.

Achieving effective ESG implementation will by now be a key concern for all trustee boards. The new PMI report addresses the principal issues in a through but accessible manner and will provide a priceless insight into the challenges of ESG

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