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New report on pension trustees and investment duties

A working group commissioned by the Financial Markets Law Committee has published a report intended to assist pension trustees in making investment decisions in the context of sustainability and climate change, providing a general explanation of the legal position and the uncertainties and difficulties that exist.


The short report is worth reading in full, but its principal purpose is to emphasise the importance of these issues for trustees when exercising their investment powers. Because those issues have a general impact on the risk and return of an investment, they should be classified as financial factors which must be taken into account by trustees. The report stresses that trustees cannot leave the relevance of climate change to what is required by current legislation and regulation, as that would not address all the risk of the investment. As pension funds exist as participants in a much wider financial and economic network, the macro effect of climate change on the economy cannot be ignored by the trustees.


This report adds to the general debate about the materiality of those issues to investment considerations. While the report is careful to state that it is not advice, it is bound to be relevant should the inclusion of those issues in the trustees’ deliberation process become the subject of dispute.

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