If the last year and a half has shown us anything, it is to expect the unexpected. Just as businesses didn’t see Covid-19 coming, who could have predicted the CO2 shortage and the soaring wholesale gas prices causing this energy crisis?
Nine energy companies collapsed this week, leaving 6 million customers facing losing their provider. BP announced it will be restricting supplies of petrol and diesel to ensure continuity of supply.
While the Prime Minister played down the crisis as a ‘short-term problem,’ we may well be facing the worst predictions – a winter of energy prices hikes, blackouts, and food shortages.
This all reinforces the fact that time is of the essence and if we are not already, companies and pension schemes must now prioritise ESG and responsible investment. Pension funds are a powerful force in getting companies to embrace environmental, social, and governance (ESG) values such as combating climate change, and while in the past, there was some reticence because schemes had to balance the challenge of financial returns against the desire to do more for the environment, the issue is now pressing.
Consumer demand for ESG is also accelerating change – people want to know more about where and how their money is being invested.
Research from Aviva found that two-thirds (67%) of consumers believe that it is important to consider ESG factors before investing and this figure rises to almost three in four (72%) for those respondents with a pension.
Pension schemes hold around £1.7 trillion of assets, with around 80% of private sector DB schemes having fewer than 1,000 members. How do these small schemes transition to ESG efficiently and effectively? Just meeting the ever-increasing compliance burden can lead to running costs exceeding £1,000 per member every year, compared to under £200 for the largest schemes. So how can they evolve?
Many will need far greater support and investment, and one solution is consolidation – a move that will not only save them money but provide the resources, governance, expertise from professional trustees, and security their members want and deserve.
At Stoneport Pensions we offer a consolidation vehicle for occupational defined benefit pension schemes in the UK with fewer than 1,000 members. At our core we are a defined benefits scheme, but we have been set up to tackle the big challenges faced by smaller schemes. Rather than having to go it alone, we provide the security and support to not only make a difference to the cost and governance burdens they face, but also to ensure they can respond to the unexpected.