PP Live urges less box‑ticking for sustainability

At the Professional Pensions Live conference in London on May 19, senior industry figures warned that pension trustees are still caught in “box‑ticking” routines that may hinder genuine progress on sustainability.

Tailoring sustainability beyond checklists

Kerry King, executive director of capital markets at Accounting for Sustainability, told a panel that a “more tailored approach rather than box‑ticking exercises” would “really help outcomes.” She highlighted that trustees must examine the real impact of their decisions, noting that “every scheme needs to be aware of misalignment between scenarios and modelling.”

She added that pension funds have “a significant role in ensuring their providers are aligning to the mandate and ensuring decisions they make are aligning to the long‑term objectives” of the scheme.

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Governance and documentation must improve

Louise Davey, trustee director for the Independent Governance Group and head of policy and external affairs, echoed the call for stronger governance. She urged trustees to “really focus on governance and ask the right questions to managers and be thorough and document approaches.”

Davey observed that most trustees accept climate change will affect the economy and, by extension, their portfolios. However, she warned that “what is not always looked at is who this is financially detrimental to,” highlighting a “gap in how to deal with that.” Schemes should be specific about why they are or are not taking certain actions and ensure that documentation is “robust.”

She differentiated between defined benefit (DB) and defined contribution (DC) schemes, saying DC plans have “more scope … to think more creatively” and often involve larger scales that “bring more options.” She noted there are “challenges and different questions [to be asked] depending on demographics of schemes.”

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Both speakers noted that recent progress has been driven more by technology than by policy, with change occurring because “things have got cheaper rather than policy change.”

During the discussion, the panel touched on the Taskforce on Climate‑related Financial Disclosures (TCFD). King argued the TCFD framework has been given a “bad rap.” She suggested some “unintended consequences” have emerged but said it “was a game changer in getting climate risk as a financial risk recognised.”

Davey added that while the TCFD structure itself isn’t the main obstacle, progress has been uneven because “the industry needs to do more planning around supply and distribution risks.” Voting and engagement “needs to reflect real world change.”