Daily ESG Briefing: UK pension funds expect 5% hike in annual governance costs because of ‘regulatory overload’

The latest developments in sustainable finance

More than half of UK work-based pension schemes expect governance costs to increase by more than 5% annually because of additional regulatory requirements such as the introduction of ‘dashboards’ to provide beneficiaries with details about their pension savings, and the consolidation of defined benefit schemes. The UK’s Association of Consulting Actuaries has warned that “regulatory overload” is also discouraging people from acting as trustees for pension funds. According to a survey of 212 employers, more than three quarters expect trustees to consider resigning because of the additional requirements. “The pensions industry is creaking under the weight of too much legislative change being pushed through at the same time,” said ACA Chair, Patrick Bloomfield. “A widescale capacity crunch is already happening and set to get worse as Dashboards, GMP equalisation, simple statements, scam prevention and climate change are all competing for space alongside fundamental changes to DB funding regulation and DC value for money”. 

The climate transition is strengthening investor appetite for metals needed for wind farms, electric vehicles and batteries, according to Global Palladium Fund. The fund, which specialises in exchange-traded commodities, said that feedback from a European investor roadshow last week suggested that increased environmental regulation and government climate targets were driving interest in metals such as copper and nickel. 

 The Global Real Estate Sustainability Benchmark (GRESB) has established a new independent non-profit foundation to own and govern the GRESB standards. It comes just over a year after a deal that saw private equity house Summit Partners acquire part of GRESB from the Green Building Certification Institute for an undisclosed sum, alongside GRESB itself also buying a stake as part of the deal. The organisation said at the time of the deal that the standards would be spun out into a foundation. The GRESB Foundation, a Dutch Stichting, has established a new governance structure, consisting of standards committees, expert resource groups and working groups.  

Swiss sustainability specialist Ethos Foundation has contacted food companies and retailers in Brazil and Europe as part of a new engagement programme focused on deforestation in supply chains. The body, which is part of consortium Shareholders for Change, will provide an overview of the initial results of engagement next week, it said.  

Real assets investors rank climate change as the most important ESG issue but struggle to integrate the considerations of climate change into their investment portfolios, according to a survey by Macquarie Asset Management. The survey of 180 global real assets investors including asset managers, asset owners and banks found that almost half of the respondents “generally” do not address physical or transition risks in their investment portfolios. Some 47% of respondents track some or all of their portfolio emissions while only 35% have committed to aligning their investments with Net Zero by 2050.