As of today, regulations take effect which require pension fund trustees to have a policy on how their investments consider financially material ESG factors, including climate change. Additionally, trustees must also show how they plan on addressing these risks through their engagement and voting activities, for example with high-carbon companies.

In response, Fergus Moffatt, head of UK policy at ShareAction, said: “Today is a landmark day for the pensions industry. Not only does this essential reform to the investment regulations oblige trustees to address the financial risks to our savings associated with climate change, it also reflects the growing public demand by pension savers for their money to do better. Last week, the Government’s own research made clear that 68% of UK savers want their pension scheme investments to consider impact on people and planet alongside financial performance. The new regulations represent a welcome first step in reflecting savers’ voices through their investments.

“After nearly a year of getting their house in order, we fully expect trustees to have ambitious ESG and stewardship policies in place and to be considering how they communicate their significance to members. In this respect, by the end of the year, ShareAction intends to undertake a full review of the disclosures of the 16 largest mastertrusts in the UK.”