Environmental, Social and Governance (ESG) considerations are an increasingly important issue for Local Government Pension Scheme (LGPS) Funds.
Regulatory requirements are growing and successful fulfilment of ESG obligations requires Fund Officers of Administering Authorities, their Pensions Committees and Local Pension Boards to work together on ESG issues.
This requires a well defined ESG strategy, underpinned by an appropriate framework for managing, monitoring and reporting on risks and opportunities.
Individual LGPS employers should also seek to understand how their Fund’s approach to ESG can impact on funding valuation outcomes.
Performed effectively, the Fund will become more resilient and increase transparency and value to stakeholders.
Common themes Administering Authorities need to think about include:
- Implementation of the four Taskforce for Climate-Related Financial Disclosures (TCFD) pillars and associated reporting
- Incorporating ESG factors into governance
- Support in setting and evaluating ESG and Net Zero strategies
- Increasing focus on stewardship and stewardship reporting
- Availability and quality of data on different investment classes
- Nature of support from a given Fund’s Investment pool
- Options for joint procurement and applying power from collective LGPS scale
- Member engagement
Understanding ESG-related risks and opportunities can improve long-term funding and have a net positive effect for Funds and their employers. PwC aim to work with pension schemes to understand their views on ESG at a strategy level prior to implementation, which ensures a holistic approach to ESG risks and opportunities is adopted.
PwC is a recognised leader in this area. We help guide both UK private pension schemes and LGPS Funds through their ESG risks and opportunities with advice, strategy, transformation, and reporting solutions.
Our experts can support you in legal, regulatory, investment, covenant, reporting and risk management tailored to your existing knowledge levels with support falling into the following areas as required:
- Understanding the ESG status of your scheme investments using our proprietary AssetClarity framework
- Understanding employer related ESG considerations
- Working collaboratively to develop your pensions ESG strategy ensuring alignment with key stakeholders
- Ensuring compliance with existing and forthcoming regulatory requirements which apply to LGPS Funds
- Designing a sustainable ESG operating framework
- Implementing ESG solutions to manage risk and create value
- Support on stewardship and stewardship reporting
Our specific expertise on stewardship reporting is demonstrated by our position on the National LGPS Framework for Stewardship services.
We will work with you to understand your view on ESG risks and opportunities so that ESG integration can be considered at a strategic level. We can then support you across the following areas:
- Carrying out ESG reviews including alignment with the TCFD, TNFD, the United Nations’s Principles for Responsible Investment (UNPRI), the Financial Reporting Council (FRC) Stewardship Code and other relevant market standards
- Employer covenant ESG reviews
- Developing and implementing ESG and net zero strategies
- Fund governance, including in relation to specific ESG considerations taking into account the expected Scheme Advisory Board response to the Good Governance review
- Stewardship and reporting (including support on implementation statements and becoming a signatory to the FRC Stewardship Code)
- Member engagement
- Key stakeholder management including enabling Administering Authorities and partner Funds in the same Investment Pool to potentially work together to set ESG strategies and align messaging.
Contact us
