Pensions Minister Guy Opperman reiterated his belief that consolidated pension plans will be better able to manage new environmental, social and governance (ESG) requirements, and supported the abilities of administrators to overcome the challenges posed by changes.

When speaking to the Work and Pensions Committee at the last session of its survey on pension management and COP26, Opperman was asked how confident he was that administrators were equipped to handle this. that was asked of them.

He replied, “We are damned if we do and damned if we don’t. If we don’t ask administrators to step in and accept the consequences of climate change, we will be massively criticized.

“If we ask, some will say it’s a big learning curve for them. It’s a big learning curve, but there is an awful lot of advice.”

Opperman noted that there was a “real problem” around the long-term compatibility of reporting standards, but that he had “no doubt” that administrators would be able to fix the problem.

“We have consulted widely,” he added. “The level of engagement of the Climate Related Financial Disclosures (TCFD), ESG and Stewardship Task Force is outstanding. “

However, Opperman warned that very small projects would struggle to do whatever the new requirements asked of them.

“Bigger is better,” he continued. “It’s better for the members, it’s better for the results, it’s better for the reports and it’s better for the trustees.

“I think that having consolidated larger plans means that the reporting and the situation of the trustees, which is an expensive burden and serious work, is going to be easier because, instead of a lot of plans, we will have less at a time. to DC and DB, where they will have a greater level of expertise.

“Because they are bigger, they will have more capacity to deal with these particular problems.”

Additionally, Opperman said larger projects would be better suited for investing in green infrastructure.

He concluded: “It is not easy to invest in green infrastructure. It is much easier to be invested in gilts or bonds.

“So what we need are programs that are consolidated on a scale enough that they can invest for the results that we are all looking for. “