Question to the Ministry of Housing, Communities and Local Government:

To ask His Majesty's Government what guidance they are providing to members of the local government pension scheme about non-financial considerations of responsible investments; and whether they plan to change the requirements for investment and divestment decisions relating to asset or country allocations and responsible investing.

The government intends to publish updated guidance on preparing and maintaining an investment strategy statement later this spring, subject to the passage of the Pension Schemes Bill and regulations containing the relevant guidance making powers coming into force. This guidance will not be subject to formal public consultation but was shared for comment with all Local Government Pension Scheme (LGPS) administering authorities, asset pools, and the LGPS scheme advisory board alongside statutory consultation on the regulations.

LGPS administering authorities will be required to set an approach to responsible investment in their investment strategy. The guidance is expected to restate the existing position that when setting their investment strategy administering authorities must consider all factors, including environmental, social and governance factors, that are financially material to the performance of investments, and that non-financial factors can also be taken into account provided they do not risk significant financial detriment to the scheme and administering authorities have good reason to believe scheme members would support the decision.

As with now, neither legislation nor guidance will dictate asset allocations or levels of investment in specific geographies. However, administering authorities remain legally required to comply with UK sanctions, including restrictions on dealings with designated individuals, entities, and countries.