A recent study conducted by XPS Pensions Group concluded that despite a multitude of pension schemes having “clear climate change objectives” (including becoming net zero), 26% of fiduciary managers lack a net zero goal. 

The firm’s results, which were published in a newly-launched report ‘Progression of UK fiduciary managers’ approach to ESG integration’, also indicated that the fund managers and trustees’ approaches to tackling climate change also differed. 

Furthermore, over 50% of fiduciary managers surveyed did not give explicit climate-related requirements for underlying funds in their investment strategies, indicating a large amount of fiduciary managers are not implementing climate preserving methods into their investment strategies. 

This shows managers could be taking climate issues much more seriously, XPS’s research found. 

The report also indicated that fiduciary managers had made some progress in integrating ESG into their investment approach, with 27% of managers receiving a ‘green’ overall rating from XPS – the highest level since the survey was launched. 

XPS study fiduciary ESG

André Kerr, partner at XPS Pensions Group, said: “While it’s clear that fiduciary managers continue to make progress in integrating ESG into their day-to-day investment decisions, there are still some areas where there may be a mismatch between the commitments trustees have made and the actions of the FM.” 

He added: “Trustees must be active in examining their FM’s ESG practices and ensuring that these align with their scheme’s sustainability goals.” 

In an earlier separate report, EY noted that, although the general standard of ESG integration has improved, some fiduciary managers are starting to materially lag their peers. 

“We expect to see continued growth in this market, especially in light of the recent gilts crisis which has encouraged many trustees and corporate sponsors to revisit their investment governance and operations,” the EY report stated.

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