The Society of Pension Professionals (SPP) has published an environmental, social and governance (ESG) guide for pension trustees, setting out how trustees should engage with asset managers on ESG issues.

The Trustee and ESG Guide outlined the various regulatory ESG disclosure requirements, ESG disclosure obligations for asset managers, a summary of the information that trustees need from their asset managers and a breakdown of the role of the investment consultant in ESG matters.

Given trustees of defined benefit (DB) and defined contribution (DC) are subject to several disclosure obligations in respect of their investments, the SPP argued that it is important for trustees to have the information they need from their investment managers to report effectively.

As a minimum, the SPP said trustees should expect investment managers to provide all information required for trustees to meet their regulatory obligations.

Whilst it acknowledged that there may be other information or metrics that are useful, it clarified that these are more likely to be provided on a best endeavours basis and may potentially not be comparable between investment managers.

The SPP said that the climate disclosure requirements for trustees fall under the Statement of Investment Principles (SIP), the Implementation Statement, and (for larger schemes) climate reporting requirements.

In addition to these disclosure requirements for trustees, the SPP noted that there are also two key ESG disclosure frameworks that are relevant to UK asset managers.

It also pointed out that, alongside the consumer facing disclosures, the Financial Conduct Authority is set to introduce a further set of detailed disclosures for institutional investors, or for retail investors interested in receiving additional information.

Commenting on the guide, SPP President, Sophia Singleton, said: “This practical guide is a welcome addition to the available guidance on ESG for trustees, builds on our 2023 guidance on the same and is packed full of useful information in the form of checklists, summaries and case studies as well as more in-depth guidance.

“There is still some uncertainty about obligations in this area so we hope this SPP guidance will play a useful role in raising awareness and understanding.”

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