FEM logo
Fund EcoMarket

the sustainable, responsible and ethical investment information hub

Pensions & Social Investment: Law Commission review

We are delighted to welcome the Law Commission review of ‘Pensions & Social Investment’ published June 2017.

This important review, whilst not fully digested yet, appears to support and even advance the view that social, as well as other related ethical and environmental considerations should form part of our pensions investment landscape and decision making.

You can see pensions media coverage of the Law Commission report here.

Or download the full report here

The Law Commission introduction to this document reads as follows:

“Our findings on social investment

The barriers to social investment by pension funds that we identified were, in most cases, structural and behavioural rather than legal or regulatory.

We set out options for reform where we have identified steps which could be taken by others to address these barriers. We also make some recommendations where we have identified that the law could be improved so as to reduce the impact of these barriers. These recommendations were identified in our 2014 report and have been updated in light of the current pensions landscape.

We recommend that:

  • For trust-based pensions, the Occupational Pension Schemes (Investment) Regulations 2005 should be amended in the following ways:
    • The reference to “social, environmental or ethical considerations” should be amended to ensure that it accurately reflects the distinction between financial factors and non-financial factors.
    • There should be a requirement that the statement of investment principles (SIP) produced by trustees should state trustees’ policy (if any) on stewardship.
  • For contract-based pensions, the Financial Conduct Authority should require schemes’ Independent Governance Committees to report on a firm’s policies in relation to:
    • evaluating the long-term risks of an investment, including relating to corporate governance or environmental or social impact;
    • considering members’ ethical and other concerns; and
    • stewardship.
  • We also recommend that the Financial Conduct Authority should issue guidance for contract-based pension providers on financial and non-financial factors, to follow the guidance for trust-based schemes given by The Pensions Regulator.

We suggest ‘options for reform’ in the following three areas:

  • investment in social enterprises (such as charities and community interest companies);
  • investment in property and infrastructure; and
  • encouraging savers to engage more actively with their pensions.”

[http://www.lawcom.gov.uk/project/pension-funds-and-social-investment/]

 

Additional Information

Published 18 June 2018 – The FCA response to this review is here

Sign Up to our Newsletter

If you are a Financial Services Industry professional you can sign up for our newsletter

Click Here

Latest News

Newsletter update from SRI Services
November 30, 2018

  Following on from a rather busy few months here are some news highlights and links to  recent activity, published this morning in our SRI Services & Fund EcoMarket newsletter (click this link for formatted version or see text and links below.)   ====== SRI Services &  Fund EcoMarket news (and beyond!) (For UK based Financial […]

‘Sustainability & Suitability’ SRI event videos
November 8, 2018

I am delighted to share the videos from our ‘Sustainability and Suitability’ SRI event for those who were unable to attend on the day. Keynote speaker Lord Deben’s climate change speech was a particular highlight.

Why Climate Change Matters to Investors – Lord Deben video from our 3 October event
October 25, 2018

We were absolutely delighted to welcome Lord Deben (John Gummer) to our SRI Services and Partners event on 3 October 2018. Lord Deben spoke elequently and passionately on ‘Why Climate Change Matters to Investors’ – his speech can be viewed here, on the Fund EcoMarket YouTube channel: (And yes, we concur with the view that […]