New Trustee Sustainability Working Group puts fossil fuel phaseout on the agenda

A new working group of UK trustees is set to outline its key priorities tomorrow, with climate stewardship and policy advocacy around new fossil fuel projects ranking at the top of the agenda.

The group, launched in December last year, aims to give a voice to smaller schemes that may not have sufficient in-house stewardship capacity and plans to make climate a key priority, Bobby Riddaway, managing director at HS Trustee and chair of the new initiative, told Net Zero Investor.

“When I became a trustee two years ago, I noticed very quickly that there isn’t really a strong trustee voice for many schemes in the country. Even some massive schemes are often under-resourced when it comes to stewardship, so there really is demand for cooperation,” he said.

The initiative currently includes 13 members, including trustees from BEST Trustees, Dalriada, Pi Partnership, LawDeb Pension Trustees and the Independent Governance Group, acting on behalf of some of the largest DC and DB schemes in the UK.

The group is committed to lobbying policymakers to cease any backing of new fossil fuel projects, though it does not advocate divestment at this stage. Riddaway stresses that this reflects the views of the majority of working group members for the time being, though individual members may hold different perspectives.

The UK pensions market still has more than 5,000 private sector DB schemes, most of which are closed to further accrual. It also has more than 1,000 DC schemes, though most DC savers are now with one of the 30 master trusts.

UK schemes with more than £1bn in assets are required to prepare TCFD reports, yet coordination between trustees could play a vital role in preventing these reports from becoming tick-box exercises, Riddaway argues. In time, he hopes the group can help pension providers put in place transition plans “with real-world impact,” which could subsequently be rolled out to other schemes.

Riddaway sees the group as taking a proactive stance on stewardship: “We want to get ahead of legislation and help trustees keep on top of the agenda, moving away from simply focusing on disclosures and towards turning our pledges into action. We don’t just want to be responding to consultations but actually raising our voice and sending a clear message,” he stresses.

Over the next twelve months, the group also intends to work closely with regulators and other market participants to integrate the concept of planetary solvency, as set out by the UK’s Institute of Actuaries last month, into practice.

The working group hopes to enable smaller schemes to participate in a select number of stewardship campaigns through active collaboration with campaign groups such as ShareAction.