The U.K. government will work with the financial services industry to help make impact investing easier, including potential changes to pension fund law.
The government published a response to an industry-led report released in November, which made five recommendations aimed at enabling investment to be better aligned with investor values.
In its response Tuesday, the government said it was committed to working with the investment and savings industries to support the launch of further social impact investment strategies and encouraging more investments into relevant areas, such as opportunities that address social challenges.
The report said there are areas in which the government "is minded to make" regulatory change to help ensure environmental, social and governance factors are "properly considered in pension investments." This includes changes to investment regulation to help grow the social impact investment market, as well as changes to pensions regulation "to make it easier to invest with an environmental and social impact."
The government will consult on changes to allow for consideration of broader financial risks and opportunities, including those related to ESG; to strengthen pension funds' ability to take participant concerns about investments into consideration; and will also consult on clarifying the ways pension funds should engage with the firms in which they invest.
Departments within the government will also consider, at the ministerial level, "what more can be done to increase consideration of the wider impacts of pension investments — environmental and social, as well as financial," added the report. The government "has an aspiration that pension schemes could, if they chose to, target a minimum percentage allocation toward investments that have an explicit social or environmental purpose, and report on that."
"People increasingly want to see their savings and investments to have a positive impact on society, as well as bring financial returns," said Tracey Crouch, minister for sport and civil society, in a statement accompanying the report. "By utilizing the wealth of experience within the financial services industry, we can expand social impact investing to help build a society that works for everyone."
