ESoG / EDI – more governance policies before the Code is even published

At about the same time that Pope Francis announced a historic first in allowing women to vote at an influential global meeting of bishops in October 2023 and Ellie Goldstein is living her dream as a model, the Pensions Regulator (TPR) has published two sets of equality, diversity and inclusion (EDI) guidance: one aimed at governing bodies (includes Pension Trustees) and the other for employers.

I find that some Trustees have started their Effective System of Governance (ESoG) work initially focussing on their policies. I think this is a little cart before the horse, as documenting the governance framework first will more easily allow appropriate proportionality to be applied before documenting the policies and procedures etc. However, any progress on recording the ESoG is good progress.

For those Trustees who have focussed their ‘gap analysis’ on the policies, your time has not been wasted but your work is not yet done. Before the Single / General Code has even been published, we have an update. I’ve assumed this recent EDI guidance may not have made it into the Single / General Code or why would separate guidance be published? Although I’m happy for my assumption to be proved wrong on the important subject of EDI.

The guidance for Trustees is to develop and maintain an EDI policy, including a definition of EDI, a training plan and the objectives of the governing body in respect of EDI. The role of the Chair recorded in the governance framework also needs to be updated, as TPR notes that it expects the Chair to lead EDI progress and set the EDI conduct and behaviours of the governing body, “embedding it in the culture of the governing body and ensuring that any EDI policies are followed.” Don’t forget, in respect of the ESoG, TPR states that the draft code sets out its expectations of the conduct and practice of governing bodies.

The EDI guidance includes goals and objectives for the governing body being agreed at the start of the pension scheme year, with performance of in relation to these objectives assessed and reviewed on an annual basis – potentially an update to the Own Risk Assessment (ORA).

The guidance on EDI gap analysis is around “diversity of characteristics, life experiences, expertise and skills”, with practical suggestions to fill any existing diversity gaps, including; appointing professional trustees (my CoI declared here), allowing deferred members to stand as member nominated Trustees and if diversity cannot be achieved, ensuring advisers provide diversity of thought, which I believe will importantly help to challenge any decision making bias in the governing body.

At the same time as all of this, Freddie Mercury’s ‘shortest, tightest’ leather shorts sold for £18,000. I’m still trying to figure out where this fits in the governance framework analysis.