The UK’s Department for Work and Pensions (DWP) has launched the Taskforce on Social Factors for the nation’s pensions industry, following its consultation on consideration of social risks and opportunities by occupational pension schemes.
Social factors have come to refer to several considerations for investors, such as organisations’ workforce practices, especially labour rights and health and safety; supply chain and modern slavery issues; and inclusion and diversity.
The taskforce will support pension scheme trustees and the wider pensions industry with some of the key challenges around managing social factors, including the identification of reliable data and metrics.
The key objectives for the taskforce as defined by DWP are to:
- identify reliable data sources, and other sources, which could be used by pension schemes to identify, assess and manage financially material social risks and opportunities;
- monitor and report on developments relating to the International Sustainability Standards Board (ISSB) and other international standards;
- develop thinking around how trustees can identify, assess and manage the financial risks posed by modern slavery and supply chain issues.
The taskforce includes representatives from pensions schemes, asset managers, data providers, cross-industry collaboration groups and civil society. Government departments and regulators are observers on this taskforce, while DWP provides the secretariat support.
The taskforce will operate for one year and deliver guidance and recommendations to the pensions and investment industry. In addition, its work will contribute to further development of wider social factor principles, international standards, and metrics.
Members of the taskforce include Luba Nikulina, chief strategy officer at IFM Investors, Stephen Barrie, deputy chief responsible investment officer at Church of England Pension Board, Daniel Jarman, stewardship manager at the Pension Protection Fund (PPF), Joe Dabrowski, deputy director of policy at Pensions and Lifetime Savings Association, and Caroline Escott, senior investment manager, active ownership, at Railpen, among others.
Government department and regulator observers also include the Financial Conduct Authority, the Financial Reporting Council and The Pensions Regulator, among others.
Nikulina, chair of the taskforce, said: “Every investment has an impact on people as well as the planet and social factors are crucial for long-term investors. Right now, the investment industry doesn’t have a comprehensive way to measure these factors, and that’s why I’m so excited to lead this taskforce created with the specific purpose to help pension trustees identify, assess and manage social risks and opportunities.”
PPF’s Jarman said: “The importance of understanding and integrating social factors into the investment process has come to the fore in recent years. This is currently a challenge, given the wide range of data providers that exist.”