Pensions Regulator launches climate initiative

The new industry group will be chaired by Sackers partner Stuart O’Brien

A new pensions group has been launched to set out how trustees should address climate-related financial risks.

The Pensions Climate Risk Industry Group, set up by The Pensions Regulator (TPR) and chaired by Sackers partner Stuart O’Brien, will produce guidance on how trustees can integrate, manage and report on climate risks using the recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD).

The group’s launch follows the requirement for trustees to state their climate change policies from 1 October 2019, as part of a scheme’s Statement of Investment Principles (SIP).

The UK government set out its expectation for all listed companies and large asset owners to disclose in line with the TCFD recommendations by 2022 as part of its Green Finance Strategy in July 2019.

“Pension trustees are already under a legal duty to consider factors which are financially material to their investment decision making. Managing the financial risk of climate change is no exception,” Stuart O’Brien, partner at law firm Sackers and chair of the Pensions Climate Risk Industry Group said.

“However, to date, the way in which trustees might approach this has not been universally understood or acted upon. The role of group is to provide practical and accessible guidance to help trustees of all schemes integrate, manage and report on climate risk as part of their investment governance – and to use the TCFD framework as a tool to do so,” O’Brien added.

The group, which also comprises the Department for Work and Pensions and Department for Business, Energy and Industrial Strategy, will publicly consult on draft guidance in early 2020, with TPR then incorporating the key requirements into the Governance Code.

Additional guidance will also be provided, including recommended best practice, to help trustees meet the government’s Green Finance Strategy.