ESG: how is LGIM helping you?

Five pointers to help you understand what we at LGIM are doing to support your pension governance strategy

Recent months have highlighted how regulators, scheme managers and employees alike are increasingly alive to the need to incorporate ESG considerations into pension governance.

In 2018, the Department of Work and Pensions (DWP) flagged the importance of environmental, social and governance (ESG) issues in a consultation on strengthening pension funds’ investment duties. Stewardship obligations, which include voting on and engaging with investee companies, including consulting indirectly via asset managers or with fellow shareholders on ESG issues, must now be incorporated in a policy by all trust-based schemes. As a matter of good practice in due diligence, the Financial Conduct Authority (FCA) will expect providers of contract-based schemes to follow suit, as a baseline to develop an understanding of how their asset manager approaches these issues.

For our part, we are improving our corporate governance and active ownership policies to stay in lockstep with increasing member demand for responsible approaches.