According to Hymans Robertson, nearly two-thirds of trustees (62%) indicated they would be willing to pay a higher buy-in premium in exchange for an insurer with stronger ESG credentials.

A recent poll by the firm shows ESG considerations are being increasingly taken into account when it comes to defined benefit (DB) buy-in decisions.

The ESG scrutiny on insurers looks set to continue as they begin to adhere to the new rules set out by the Financial Conduct Authority to make climate-related disclosures consistent with the recommendations set out by the Taskforce on Climate-related Financial Disclosures.

Furthermore, the increased focus on ESG is a result of the increasing environmental expectations of scheme members.

Given that buy-in is becoming an increasingly likely outcome for DB schemes, the significance of ESG when it comes to these decisions is only likely to grow in the future.

Head of ESG for risk transfer Paul Hewitson said: "The scale of investment within ESG presents a huge opportunity for the risk transfer market, which can materially improve its position within this area and create real change.

"The willingness of insurers to move towards investing in a greener way must be recognised, and this will benefit both pension scheme members and our wider society.

"The indications from our webinar poll demonstrate that there is a clear need for insurers to improve what they offer within this area and differentiate themselves in the marketplace. 

"The importance of ESG will only continue to gain momentum and increase in importance to trustees and the risk transfer market."

Source: Professional Pensions

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