STEP Six

Disclosure And Reporting

RIO Guide Graphic - Step 5 - Disclosure and Reporting

The FSCA Guidance Notice requests pension funds to report at least annually on how it has adopted ESG integration in its investment process.

Pension funds are encouraged to adopt sustainable reporting practices in annual reporting.

Step 6

Introduction

What Does The Regulation Say?

The FSCA Guidance Notice, paragraph 6, reporting, states that pension funds are encouraged to adopt Sustainable Reporting practices in its Annual Reporting, and to include details of:

  • How it has adopted ESG integration in its investment process
  • Type and value of assets held in compliance with the Guidance Notice
  • Any significant changes to the IPS (with relevance to the Guidance Notice i.e. ESG strategy and integration) during the year in review

Paragraph 5 also encourages funds to make a copy of the IPS available on its website and to disclose:

  • When and by whom the IPS was approved
  • How often it will be reviewed
  • How the fund will monitor and evaluate sustainability issues
  • The active ownership policy

Pension fund reporting is an opportunity to communicate performance, clearly and succinctly, on key parameters, including its ESG integration practices, to clients, beneficiaries, and other key stakeholders. This information supports understanding on:
  • What the organisation is and what its core purpose and objectives are
  • What the organisation’s beliefs and commitments on sustainable investment are
  • How these beliefs and commitments are translated into action
  • The organisation’s performance against its beliefs, its commitments, and its objectives and targets
The reporting serves several important purposes and provides benefits to the pension fund and its key stakeholders in a number of ways, including:
  • Advances transparency and accountability, providing key stakeholders with assurance that commitments are being carried out in practice
  • Drives continuous performance improvement
  • Safeguards the integrity of codes and initiatives (such as CRISA and PRI) to which the investor has made a public commitment
  • Helps build a growing knowledge bank of ESG in practice, promoting dialogue and learning
A checklist of what should be disclosed in accordance with the FSCA Guidance Notice and CRISA is available here.

Report Formats

ESG and RI disclosures may be presented in the form of a stand-alone Sustainability Report (some pension funds refer to it as a Responsible Investment Report) or preferably, incorporated into the Annual Report, typically referred to as an Annual Integrated Report. South Africa’s King IV Report on Corporate Governance, which includes a sector supplement for retirement, supports responsible investment and recommends that a fund follows CRISA’s disclosure practices. It also encourages integrated reporting. Guidelines for developing this reporting product are available from: The International Integrated Reporting Council’s (IIRC) Integrated Reporting Guidelines. There are also numerous international disclosure regimes that provide valuable frameworks for reporting, and which a fund should evaluate whether they might be expected to report in alignment with. These include:
  • The Principles for Responsible Investment – signatories to the PRI are required to report on their responsible investment practices through the PRI’s Reporting Framework. The Framework, which undergoes regular updates, consists of mandatory and voluntary modules.
  • IFRS S1 and S2 – the International Sustainability Standards Board issued IFRS S1, which addressed sustainability-related disclosure, and IFRS S2, which addresses specific climate-related disclosure, in June 2023. Companies that apply IFRS S1 and IFRS S2 will meet the requirements of the Task Force on Climate-related Financial Disclosures as these have been integrated into the ISSB’s Standards.
  • The Global Reporting Initiative (GRI) – provides detailed sector based ESG Key Performance Indicators that can be applied at the portfolio and investee company level.

Examples of reports from across the world are provided below.


InstitutionCountryResource
GEPFSouth AfricaDocument Link
Ontario Teachers Pension PlanCanadaDocument Link
Environment Agency Pension FundUnited KingdomDocument Link
New Zealand Superannuation FundNew Zealand Document Link
CalPERSUnited StatesDocument Link

Further Reading

FSCA – Guidance Notice 1 of 2019 on the Sustainability of Investments and Assets

CRISA (2011) – Practice Note on Disclosure

World Bank (2020) – Sustainable Investment: Best Practice Disclosure Checklist for Pension Funds