Sustainable investing is rapidly transforming the global financial landscape, and the retirement benefits sector is no exception. Lisa Betty Oyella, CFA, during a stakeholder engagement on June 26, 2025, gave insights for integrating Environmental, Social, and Governance (ESG) factors into retirement benefits scheme (RBS) investments was both compelling and urgent. As the demand for ethical and long-term value-oriented investing intensifies, regulators, trustees, and investment managers alike are being called upon to rethink traditional investment strategies and embed sustainability at the core of decision-making.
ESG is a framework used to evaluate how companies and investments perform in areas beyond just financial returns. The Environmental aspect looks at how a company impacts and responds to climate change, resource use, and sustainability. The Social component examines how a company treats its employees, engages with communities, and upholds human rights. Governance focuses on corporate ethics, board structure, transparency, and accountability. ESG helps investors identify risks and opportunities that could affect long-term financial performance and aligns investment decisions with broader ethical and sustainability goals.
ESG integration is not a superficial trend but a strategic shift driven by the recognition that sustainability risks—such as climate change, social inequality, and weak governance—have real financial implications. According to the World Economic Forum, these ESG risks rank among the top threats to economic stability and corporate performance globally. Pension funds, which manage long-term savings on behalf of millions of workers, cannot afford to ignore these dynamics. Issues like environmental degradation, labor practices, boardroom ethics, and diversity are no longer peripheral—they are central to institutional resilience and returns.
The highlighted triple bottom line of sustainability—people, planet, and profit—as a foundational framework for retirement schemes calls for integrating ESG into investment decisions. This allows pension funds to achieve improved risk-adjusted returns, strengthen their reputational capital, and stay ahead of evolving regulatory demands. Furthermore, ESG-aligned schemes are more attractive to members, especially younger contributors who are increasingly conscious of where and how their savings are invested.
Governance emerged as a linchpin in this transformation. Trustees are expected to go beyond fiduciary responsibility by ensuring that their scheme’s strategy is aligned with long-term sustainable goals. This requires establishing robust oversight structures, ensuring transparency through ESG reporting, and holding fund managers accountable for outcomes. The governance function becomes even more critical in managing ESG-related risks and aligning pension portfolios with national and global sustainability targets, such as the Sustainable Development Goals (SDGs).
Practical guidance on ESG investment strategies and allowable investments under Uganda’s regulatory framework that pension funds can consider implementing through a variety of approaches, including negative screening, ESG integration, impact investing, and thematic investments in renewable energy, social infrastructure, or inclusive technologies. East Africa is showing increasing appetite for sustainable investments, providing an opportune moment for retirement schemes in Uganda to lead and innovate.
However, successful ESG integration is incomplete without consistent monitoring and reporting. The conversation underscored the need for structured disclosures using global standards such as the Global Reporting Initiative (GRI) and the International Financial Reporting Standards (IFRS) under the International Sustainability Standards Board (ISSB). These frameworks help schemes address both “double materiality”—the impact of ESG on financial value and the scheme’s impact on the environment and society. Transparent reporting strengthens stakeholder confidence and reinforces accountability.
The integration of ESG factors into retirement benefits scheme investments is not only a moral imperative but also a strategic advantage. As pension funds seek to safeguard and grow members’ savings in a volatile world, ESG provides a lens for long-term, inclusive, and resilient investing. URBRA continues to champion such forward-looking conversations, reaffirming its commitment to a well-regulated, sustainable retirement sector in Uganda.