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In November 2016, the government asked the Law Commission to look at how far pension funds may or should consider issues of social impact when making investment decisions.
The Law Commission’s report found there are no substantive regulatory barriers to making social impact investment by pension funds. Most of the barriers are in fact structural and behavioural, including the need for clearer legislation and guidance.
This is the government’s final response to the report. It includes plans to clarify the requirements for trustees of occupational pensions and the independent governance committees of workplace personal pensions around:
consideration of broader long term financial risks
pension schemes’ ability to consider members’ non-financial or ethical concerns
the role of engagement alongside voting as an important aspect of stewardship of pension scheme assets
Changed page 10, paragraph 8 to read: "The FCA is also considering other possible extensions to the remit of IGCs and intends to consult on a single package of rule changes in the first quarter of 2019" (not the first half of 2019).