This comes as a response to the Law Commission’s report on pensions and social investment. The FCA contributed to The Government’s response and includes the following:
- Independent Governance Committees (IGCs) will have to report on how they evaluate long-term investment risks
- Guidance for contract-based pension providers on considering financial and non-financial factors with making investment decisions
- Guidance on the types of investments that can be made to unit-linked funds to clarify they are consistent with social impact investing.
The FCA aims to consult on rule by the first quarter in 2019 which will require IGCs to report on their firm’s policies on environmental, social and governance (ESG) issues. Providers of workplace pension schemes do not get off lightly, as the FCA will also consult on guidance for them to consider financial and non-financial factors when making investment decisions. We will be keeping a close eye on any updates from the FCA.