Pension schemes are pulling ahead of businesses on ESG

The research challenged finance leaders in private sector companies with DB pension schemes to rank who was leading the charge on different elements of ESG: the scheme and its trustees, or the business and its executives.

In some areas, both parties are relatively aligned - for example, a third of leaders (34%) think both the scheme and business are leaders in diversity ambitions. But around the same number (32%) think the scheme is leading the way, while 27% believe it’s their company pulling ahead. 6% think neither the scheme nor the business are leaders on diversity.

But in other areas of ESG, the scheme and its trustees comes out a clear winner - 37% of in-house finance leads admit the scheme is the leader on environmental targets, such as reducing the scheme’s carbon footprint and meeting net zero ambitions. Almost half as many (21%) think the business is leading the way, while 29% believe the scheme and business are co-leads.

Similarly, the scheme wins the race on social impact (39% of finance leads acknowledge the scheme’s leadership), and governance expectations (37%). In no area of ESG do more leaders think the business is pulling ahead.

	Both the scheme and the business are leaders in this	The scheme is leading the way on this	The business is leading the way on this	Neither the scheme nor the business are leaders in this
Environmental targets (e.g. carbon footprint, Net Zero)	29%	37%	21%	10%
Diversity ambitions	34%	32%	27%	6%
Social impact	28%	39%	23%	8%
Governance expectations	30%	37%	27%	5%

How do financial leaders judge their business’ current ESG capabilities?

The level of legal and regulatory compliance (91%) and clarity of governance structure (90%) are the areas where finance leaders judge their business’ capabilities most positively, demonstrating that companies are performing well when it comes to effective governance. However, it appears that green credentials have room for improvement.

Despite the positive outlook on business capabilities, firms' green credentials received the lowest satisfaction score, with 83% of leaders judging their business’ capabilities positively. This suggests a potential opportunity for businesses to further enhance their sustainability efforts, particularly in aligning environmental initiatives with growing stakeholder and member expectations.

Sankar Mahalingham, Managing Director of LawDeb Pensions, added:

“Pension schemes are required to manage their risks, including their ESG risks. A pension scheme operating at a good level of environmental and social responsibility, with excellent governance, will also be able to avoid posing a reputational risk to a sponsoring company. The responsibility for getting this right sits - legally - with the trustee board.

“It’s good that so many finance leaders feel able to play a significant role in improving how their schemes operate. However, it’s apparent that trustees are leading the way, and many firms have room for improvement. Finance leaders and executive boards at scheme sponsors are being pulled from pillar to post; so ESG factors are unlikely to currently be top of the priority list. It’s right that trustees - with more time and industry experience - are ensuring schemes are meeting their net zero ambitions, having a positive social impact, and embedding good governance; we would expect them to be the driving force.

“This research indicates that trustees have an opportunity to step up, and work with businesses and sponsors to enhance best practice and drive performance to improve member outcomes.”

Methodology

The research was conducted by Censuswide on behalf of LawDeb, surveying 150 finance decision makers in the UK who have input on their company’s DB scheme, and who are not sole traders, in December 2024.

Media contacts

Sandy Downs / Joe Hirst

lawdebenture@teamspirit.co.uk

07384 907528 / 07385023671