The Trustee’s approach to ESG risk management

Watch this short video on why ESG is important to your pension

As a hybrid member of the Scheme your benefits are a combination of your Defined Contribution (DC) pension pot and your current or future Defined Benefit (DB) pension benefits. Taken together, these assets are typically invested in things like shares (company equity), corporate bonds (company debt) and government bonds (gilts), as well as other types of assets. The Scheme’s aim for hybrid members is to ensure that your DC pension pot has the chance to grow in value over the long term, and that the Scheme has enough money to pay all the benefits it has promised as part of its DB commitment to members. 

The Trustee is responsible for how the money is invested, although the Trustee doesn't manage the investments directly. Instead, it sets and monitors the investment strategies for the distinct sections within the Scheme and then appoints investment managers to manage the investments on a day-to-day basis. 

Investing for the long-term means managing future risk 

Whether the Trustee is setting the investment strategies for the DB assets or the default investment option strategies and self-select investment funds for the DC assets, it takes a lot of factors into account when choosing the managers. This includes the way in which environmental, social and governance (ESG) issues could affect the value of the investments. For example, if a company has a negative effect on society or the environment, or is poorly run, its share price can fall, leading to lower returns for its investors. However, if a company is well managed and meets a genuine environmental or societal need, the financial returns for investors may be higher.

ESG covers a wide range of issues from climate change through to health and safety concerns, pollution and corrupt practices. As many of these issues may not become evident for years, and possibly decades, a long-term view is required.

ESG is part of the Trustee’s focus today and for the future 

The Trustee is focused on protecting members’ retirement benefits and offering high-quality retirement options to help members realise their retirement ambitions. This involves balancing many investment risks, including ESG risks. That's why the Trustee has made managing ESG risk and identifying the opportunities that ESG issues open up an integral part of its approach for the last 10 years. It’s also why in October 2021 the Trustee committed to achieving net zero emissions of greenhouse gases from the Scheme’s investments by 2050 or sooner. 

This page sets out the Trustee’s ESG approach and what that means for your investments. The Trustee is interested in your views on this approach and will be asking some questions about it in the annual member survey. 

View our Environmental, Social and Governance (ESG) bulletin

We understand that some of this language may be unfamiliar so we've created a jargon buster to demystify ESG.

The Trustee’s approach in detail

View our report on Task-Force on Climate-Related Financial (TCFD) Disclosures

More Information

The Trustees commitment to net zero

The Trustee recognises the need to play an active role supporting the drive to decarbonise the economy. In October 2021, the Trustee announced its commitment to achieve net zero by 2050 or sooner.
View the announcement

Statement of Investment Principles

The Trustee has set out the policy it follows when making decisions about the investments of the Scheme. The Trustee reviews this policy from time to time with the help of its advisers.
Read the Statement of Investment Principles

Annual Implementation Statement

The Trustee reports on how the Statement of Investment Principles (SIP) has been followed each year. The Trustee also outlines any reviews of the SIP that have happened during the year and any voting by the Trustee or on its behalf.
Read the Annual Implementation Statement