Considering Social Factors in Pension Scheme Investments

The Taskforce on Social Factors is a body established following the Department for Work and Pensions’ (DWP) consultation on Consideration of social risks and opportunities by occupational pension schemes.¹ With representation from pensions schemes, asset owners, asset managers, investment consultants, data providers, crossindustry groups and civil society, the Taskforce’s aims to support pension scheme trustees and the wider pensions industry with managing social factors. 

The guide is intended to provide pension trustees with the tools to identify and monitor social risks and opportunities and develop consensus in approaching these across the pension investment landscape. This supports pension trustees in embedding social factors within schemes’ investment decisions and stewardship policies in three sections:

• Social factors and pension funds explores why material social factors are important from an investment perspective, and how taking these into consideration aligns with pension trustees’ fiduciary duties.

• Social factor data discusses data trustees can use to manage social factors in investment, along with a materiality assessment framework to help prioritise areas for action.

• Addressing social factors in pension portfolios sets out a framework for addressing social factors in pension schemes, providing baseline, good and leading practice indicators, with a deep dive into the issue of modern slavery and how trustees can approach this social factor in their investments.

Appendices contain additional supporting materials, targeted at pension trustees, with a directory of data sources, guidance for effective stewardship and case study examples.

^{1 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1091035/government-response-to-dwp-social-call-for-evidence.pdf}