Environmental, Social and Governance (ESG)

Pressure to engage with ESG comes from a range of stakeholders

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.

How can First Actuarial help?

ESG monitoring

We monitor the Environmental, Social and Governance (ESG) position of all funds on our buy lists, and apply our own ESG rating to each fund. We keep this information updated and available to clients on our Hub.

We update information on each investment manager’s stance towards ESG matters following our regular reviews. Schemes can then comply with their statutory responsibility to monitor their ESG position on an ongoing basis.

 

The Implementation Statement

Our new stewardship service supports schemes through the production of the Implementation Statement. We base our insights – and analysis of significant votes – on a dataset provided by PIRC, a corporate governance service provider that specialises in voting and engagement activities.

From this, we produce the Implementation Statement at the level of detail required by The Pensions Regulator. This is supported by two documents which will act as an audit trail if the Regulator probes the contents of the Implementation Statement:

  • The SIP compliance checklist – A record of the clauses in the SIP related to voting and engagement, with an assessment of how the scheme has performed against each one. For schemes with a Defined Contribution section in place, we cover all clauses of the SIP, in line with legislation.
  • The annual voting report – This provides information about the voting record of each investment manager working for the scheme, and how they voted on significant votes. We believe that this report will demonstrate to the Regulator that trustees have given voting matters serious consideration.

Because we are keen to encourage trustees to engage with investment managers on voting, we are happy to provide annual voting reports to schemes where First Actuarial is not the investment consultant.

Why choose First Actuarial?

Our Implementation Statements and voting reports have been particularly well received by our clients. Rather than reproducing information from investment managers, we assess their data independently and add our own independent insights. With this, we’re helping trustees deliver the thorough review of activities that The Pensions Regulator is looking for, rather than resorting to a tick-box approach.

Learn more about our ESG services

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Get in touch

Get in touch with one of our consultants to discuss how we can help you.

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