DWP launches taskforce for social risks

July 21, 2022

UK government taskforce to support the pensions industry around the social factors under ESG

The UK has created a new minister-led taskforce to support the integration of social factors from ESG investing into pension scheme investments.

The taskforce will support pension scheme trustees and the wider pensions industry with some of the challenges around managing social factors, such as the identification of reliable data and metrics.

Additionally, it will monitor and report on developments with the International Sustainability Standards Board, among other international standards.

The taskforce may consider the potential impacts of the Ukraine war on modern slavery, and how this is causing investors to rethink ESG, such as the defence and nuclear sectors.

It will also help identify reliable data sources and useful resources for pension schemes to assess and manage financially material social risks and opportunities.

This work will contribute towards the development of wider principles, standards, and metrics, the Department for Work and Pensions (DWP) explained.

The launch of the taskforce follows on from responses to the government’s ‘Consideration of social risks and opportunities by occupational pension schemes’ Call for Evidence.

The Call for Evidence highlighted the need for a proactive approach to embedding social factors within pension schemes’ investment decisions and stewardship policies.

These factors include workforce conditions, supply chains, community engagement, consumer protection and modern slavery.

UK pensions minister, Guy Opperman, suggested that while there has been good progress in bringing environmental and climate issues up the pensions agenda, climate change should not be trustees’ sole consideration.

Opperman said: “Financially material social factors also pose risks and provide opportunities to schemes’ investments, and our taskforce will help ensure that focus on social factors continues to grow among pension schemes and throughout the investment chain.”

The DWP is set to continue acceleration in this area by encouraging pension schemes to join the Occupational Pensions Stewardship Council, an industry-backed forum working to move the dial on stewardship through collective engagement and sharing best practice.