Pension funds agree ESG is vital to investment returns

Green energyThe vast majority of pension funds (93%) say that environmental and social governance (ESG) issues are linked to investment returns, a significant increase since 2013, when only 81% viewed the link.

The Pensions and Lifetime Savings Association has released its annual survey which also found that there is near universal agreement that pension funds have stewardship responsibilities (98%).

Although only around a third of respondents (37%) reported that stewardship was regularly discussed at trustee meetings, this figure is significantly up from 2012, (17%).

Over two thirds (68%) of pension fund respondents said they set out stewardship responsibilities in their mandates to investment managers – up from 51% in 2014 and a marked increase from just 38% in 2013.

Luke Hildyard, policy lead, stewardship and corporate governance at Pensions and Lifetime Savings Association, says: “The near universal levels of recognition of the importance of stewardship and the widespread acceptance of the principles of ESG are encouraging.”

Sixty UK pension funds were surveyed for the report.

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