The UK roadmap was developed through extensive industry consultation and sets out recommendations in five categories: the investment regulations, stewardship and engagement, investment consultants, corporate reporting and scheme governance.
The Investment Regulations
- The Department for Work and Pensions should revisit the Investment Regulations to clarify that the consideration of ESG factors is a core part of prudent investment decision-making.
Stewardship and engagement
- Regulation and guidance should provide for a Stewardship Duty to clarify that shareholder rights are assets to be used in the best interests of beneficiaries
- The Financial Reporting Council should extend the Stewardship Code to explicitly incorporate ESG factors and continue to monitor and publicly disclose the quality of reporting by signatories against the Code.
- The FCA should expand its oversight of investment advice to include that provided by investment consultants in relation to ESG factors.
- The Pensions Regulator (TPR) should provide guidance on the interaction of trustees with investment consultants to help trustees review advice and performance.
- Through the implementation of the Non-Financial Reporting Directive, the development of standardised and comparable approaches for reporting on material ESG factors relevant to investors.
- The governance arrangements for defined-contribution (DC) schemes should be strengthened and provide for enhanced consideration of ESG factors.
- Schemes should be required to reflect on the impact of their scale on governance quality and, where necessary, consider consolidation.
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Fiduciary duty in the 21st century: UK roadmap
Produced in collaboration with UNEP FI and Generation Foundation