How social factors sit in the nest of wider PLSA RI work in 2024


23 Jan 2024

The PLSA has consistently advocated for socially responsible investing, and wants to further support industry initiatives, says George Dollner.

social impact



Web Share

The PLSA has consistently advocated for socially responsible investing, and wants to further support industry initiatives, says George Dollner.

social impact

As we settle into 2024, responsible investment remains at the forefront of our plans. We are seeking to ensure that the UK regulatory framework for investments facilitates pension funds in achieving their investment objectives, including where it pertains to ESG investing or stewardship.

Work is already well underway, including for our annual Stewardship & Voting Guidelines, which provide our members with a benchmark for their corporate reporting and investor relations. The guidelines share practical guidance as well as highlighting policy issues to consider when reviewing corporate governance and voting policies.

Throughout the year we will be engaging with a wide range of issues, including the Financial Conduct Authority’s rules on sustainability disclosure requirements, its proposals on UK-listing reforms and anti-greenwashing.

We will be monitoring further changes to the landscape closely as work is brought forward on the green taxonomy, transition plans and as we build our understanding of the recommendations put forward by the Taskforce for Nature-related Financial Disclosures (TNFD). These issues all have the potential to dramatically impact responsible investment and stewardship practices.

Keeping the spotlight on ESG – a focus on ‘S’

It’s vital for our members that we emphasise ESG. One way is by supporting our members to better understand the ‘S’. Whilst social factors are just one strand of ‘ESG’, environmental factors have dominated the ESG agenda. This dominance was due to it being a high government priority, rigorous reporting requirements and perceived simplicity in comprehension and action.

Our surveys reveal that, although social factors are gaining attraction, understanding can be limited and navigating social issues can be confusing. The ‘E’, ‘S’ and ‘G’ are often considered in isolation, and they need not be. Many want help in considering complex measurement metrics to identify and monitor companies’ social performance.

Members face growing scrutiny over their social policies and investment approaches as public awareness of social issues rises. Key issues such as diversity and inclusion, modern slavery and human rights are prompting scheme members to ask about efforts to tackle these challenges.

As a result, trustees are adapting by taking a more active role in balancing responsible investment and their fiduciary duty to members.

Of course, ESG investment can provide strong returns, but returns may rely on a longer time horizon, and social-factor investment in particular requires extra effort and attention.

We have, until recently, had plenty to be encouraged by. The government’s 2022 response to their consultation on the Consideration of social risks and opportunities by occupational pension schemes, outlined that trustees who fail to factor in financially material social factors would be deemed to not be fulfilling their fiduciary duty.

Additionally, we were pleased to see the establishment of the taskforce on social factors, of which we have been a member, and have supported through the development of a guide on Considering social factors in pension scheme investments.

However, we face the challenge of ESG considerations being deprioritised from the UK government’s current political agenda. Global economies prioritise investment return and growth objectives and investors have expressed concern that the mixed signals from government risks undermining vital ESG policies.

To combat this and help bring ESG back to the foreground, we collaborated with members to develop a set of social factor case studies highlighting best practice.

Many of our members are doing excellent work in impactful investing while maximising member returns. These case studies provide tangible examples from across the investment cycle to support members in navigating challenges posed by social issues.

From helping to highlight how to approach investing with impact, through to specific examples that demonstrate what opportunities are available, ensuring social issues remain a focal point in pension scheme thinking.

The PLSA has consistently advocated for socially responsible investing, and we want to further support industry initiatives in altering investment and stewardship strategies to help pension schemes play a leading role in investing with impact.

Look out for our upcoming social factors best practice publication in late February 2024, highlighting innovative work by our members in this area.

George Dollner is policy lead at the Pensions & Lifetime Savings Association


More Articles


Subscribe to Our Newsletter and Magazine

Sign up to the portfolio institutional newsletter to receive a weekly update with our latest features, interviews, ESG content, opinion, roundtables and event invites. Institutional investors also qualify for a free-of-charge magazine subscription.