Unison and ShareAction call for action on ESG disclosures from the LGPS

Responsible investment charity ShareAction and trade union Unison have produced a report looking at the investment strategy statements of the 88 funds in the LGPS.

The report, Responsible Investment in the LGPS, published in April 2019, found that many funds have either not produced policy on environmental, social and governance (ESG) policies, or were still developing ESG policies. In particular, the report said 49 funds had limited disclosure of information on how they took account of ESG issues and that only 29 funds, or 32%, had taken account of climate change.

The report stated: “It is clear from our research that, with the exception of a small number of leaders (notably the Environment Agency, Avon and South Yorkshire) most of the LGPS funds are still developing approaches on to how to integrate issues such as climate change or workers’ rights into their public investment policies.”

It went on: “The research shows that over 60% of LGPS funds have been rated as having limited or no disclosure on ESG matters. Compared to their peers, these funds would seem to have a low level of understanding with regard to responsible investment. This category has often created short ‘template like’ policies, possibly indicating a lack of proper ownership of their approach to responsible investment. This is clearly unacceptable for members of the scheme; action must be taken by the government and the scheme advisory board to lift this substantial group out of this poor practice.”

Bob Holloway, pension secretary at the Scheme Advisory Board, commented: “We are seeing a growing awareness of the need for sustainable investment, particularly in the area of climate change risk. LGPS administering authorities are required to publish their policy on ESG considerations as part of their investment strategy statements and the overwhelming majority do approach this positively, but the degree to which ESG considerations are taken into account in strategic asset allocation decisions does vary from fund to fund.”