RS Group Pension Scheme - Environmental, Social and Governance (ESG) considerations
The RS Group Pension Scheme (“the Scheme”) is a socially conscious scheme that works to take account of Environmental, Social and Governance (ESG) criteria to safeguard the environment and invest responsibly.
What do E,S and G factors address?
E: Not only climate change and global warming, but also, for example, biodiversity, the quality of water and the preservation of vital animal habitats.
S: Social factors include equality of pay between men and women, protection from modern slavery, the ethical quality of companies’ activities, and workforce diversity and inclusion.
G: Governance looks into the ways in which company boards operate, their remuneration policies and the transparency of their reporting.
The Trustees of the RS Group Pension Scheme are convinced that businesses that take account of ESG, like RS Group plc, are able to perform better over the long term. The Trustees also believe that responsible investing should take ESG factors as well as financial returns into account when considering where to invest funds.
The Trustee has a responsibility to act in the best financial interests of the Scheme’s members. We believe that a sustainable investment approach is the way to create and preserve long-term investment value. This is where ESG factors come into play. They’re central to the Trustee’s investment decision -making policies and processes in the Scheme. The Trustee has the final say and overall responsibility for where the money that pays your pension is invested, so we hope that by explaining our approach to investments and ESG you can understand that your pension savings are part of something bigger.
Since 2019, the Trustee has annually used ESG factors to score the funds where the Scheme invests. New investment selections are made taking account of the asset selection and voting activities of the fund managers. The Trustee also holds regular ESG-focused meetings with all the Scheme’s investment managers to monitor the steps they’re taking to enhance ESG integration.
What does this mean for the Scheme?
Our commitment to ESG means that we’re developing ESG policies so we can measure our actions and continue to hold the funds and companies that we invest in to account. The Trustees acknowledge that:
- ESG factors can influence long-term outcomes and should be a key consideration in investment decisions.
- Making responsible investments decisions can create and preserve value for companies, benefitting Scheme members in the long term.
- It’s important to take account of the risks from climate change to the financial security of the Scheme, both in terms of moving to a low-carbon economy and the impact of global temperature rises.
- ESG factors will not just affect investments held, but also funding, and considerations of the long-term financial strength of the Scheme’s sponsor and that of the companies in which our funds are invested.
How the RS Group Pension Scheme is bringing ESG to life
This all sounds good in theory, but how does that get applied in the real world of RS pensions?
First of all, the Trustee took ESG training and worked with external consultants to produce a set of ESG beliefs that will guide how ESG principles are put into practice. There will be ongoing training to keep Trustee knowledge and understanding of ESG up to date.
Once the ESG beliefs were agreed, the Trustee worked to put together an ESG policy, which explains how ESG factors will be taken into account in their management of the Scheme. The policy commits the Trustee to :
- Consider ESG in setting investment strategy, and investment manager selection and review.
- Engage with investment managers on their ESG policy and strategy and identify improvements.
- Create guidelines for what’s held in the investment portfolio, including exclusion of certain investments.
- Monitor risks, particularly climate related ones, on the Scheme’s liabilities and the employer’s ability to fund it.
- Look at introducing aspirational targets to reduce emissions within the asset portfolios.
To monitor the ESG policy, the Trustee will receive:
- Updates on the ESG ratings and investment managers’ ESG policies.
- Climate change and carbon footprint analysis, plus engagement examples from investment managers.
- Details of investment allocations in controversial sectors, like armaments and on-line gambling.
- Annual benchmarking of ESG progress against similar schemes and the Scheme’s own performance for the previous year.
Would you like to read more about our approach?
We plan to provide regular updates to members on how we are performing against our ESG measures. For more details of where we are now, you can read the following :
We are also working to understand the approach of RS Group plc to ESG and align with them where appropriate. ‘For A Better World’ is RS Group’s 2030 ESG (Environmental, Social & Governance) Action Plan to support a more sustainable and inclusive world. You can read about this at ESG strategy at uk.rs-online.com/web/content/m/esg