Richard Butcher, chair of the Pensions & Lifetime Savings Association (PLSA), has called on the pensions industry to go “beyond minimum compliance” with respect to climate change, and that he wanted to hear from schemes about the challenges they faced.

In a speech delivered in Edinburgh at the association’s annual investment conference, he explained that climate risk was a strong theme running through the event “because [it] is a systemic risk” that members of the PLSA could not ignore.

Although the PLSA was not arguing for an increase in regulation, Butcher said new environmental, social and governance (ESG)-related rules applicable to trustees were only a start and “we do believe we have fiduciary and a social responsibility to go beyond minimum compliance”.

And while there were many complex practical and legal issues, “we shouldn’t confuse a recognition of those complex issues with a reluctance in wanting to deal with them”.

“There is also potential for societal and economic damage if we move too fast or too hard,” Butcher continued. “We need to find the right balance and the PLSA wants to help you do that.

“But while it’s better to do this right than do this quickly, we still, I think, have to push the boundaries.”

As part of a “five point plan” to support workplace pension schemes’ efforts with regard to climate change, he said he wanted to talk to them about the challenges they faced “in making investments that are climate change neutral – or even climate change positive”.

PLSA plans ‘recommendations for action’

“It’s becoming increasingly clear to us that the highly intermediated investment chain is currently not working effectively in supporting schemes to live up to their new duties on climate change,” he said. “Tell me more.”

He flagged pooled funds as potentially problematic, saying “schemes need to have clarity from their managers regarding how their voting preferences on issues including climate will be exercised in these funds”.

“I want to talk to some of our local groups, fund CEOs, CIOs, members and anybody else,” he said. “I’ll be working with the PLSA team to convert your feedback into some recommendations for action, ready in time for the annual conference in October.”

Butcher’s comments as draft guidance for pension funds about how to monitor and manage climate risk is expected to be unveiled tomorrow.