Helping pension fund regulators navigate ESG

FSD Africa and Genesis Analytics have worked with the pension fund regulators in Ghana, Kenya and Nigeria to determine how best to integrate ESG principles in their supervisory processes.

We followed a process designed to answer three key questions:

• What is the status quo of ESG adoption by pension fund managers and regulators?
• How can pension funds better integrate ESG considerations in their risk management and decision-making processes?
• How can pensions regulation or policies integrate ESG considerations?

These questions culminated in the delivery of outputs for regulators to use:

• A diagnostic report for the regulator, including global and country-level current status assessments and best practices.
• Self-assessment toolkits for pension funds to use and adapt internally to better understand gaps and opportunities relating to ESG in their organisations and operations.
• A circular and recommended voluntary disclosures for the pension fund industry, as well as a recommended roadmap detailing the steps required to move towards mandatory disclosures.

Training sessions for the regulators and pension funds were part of our engagements, with use of the toolkit one of the topics covered.

A key lesson learned was that raising awareness, involving stakeholders and actively seeking their feedback led to better outputs. For regulators, this is just the start of the journey. A range of sign-offs are required followed by a “sandbox” period to create space for engagement and feedback. Only then will the mandatory disclosures be launched.