The Pensions Climate Risk Industry Group (PCRIG) this week launched a public consultation on non-statutory guidance for trustees on assessing and managing climate-related risks. PCRIG was launched last summer by various government departments to develop industry-wide guidance.
The draft guidance aims to help trustees meet legal obligations and embed climate-related risk management within the governance process, in line with the Taskforce on Climate-Related Financial Disclosures (TCFD).
Disclosure by pension schemes of information relating to climate change risk is expected to be compulsory by 2022.
Pensions minister Guy Opperman said: ‘I am committed to ensuring all pension scheme trustees do everything they can to act to limit the risk climate change poses to their members’ future retirement income.’
Stuart O’Brien, chair of PCRIG and partner at pensions law firm Sackers, said: ‘Most trustees will have acknowledged the financial risk of climate-related risk on their pension schemes but so far few have developed concrete plans to quantify and address the risks of climate change or capitalise on the opportunities of the transition to a net zero carbon economy.
‘It is for that reason that we are providing new cross-industry guidance to help pension trustees meet their existing legal responsibilities. For many pension schemes this may require new information. However, the process of risk management and setting investment strategies will already be familiar and the guide is designed to help trustees by providing a starting point for the integration of climate issues into existing trustee governance processes.’
The Pensions Regulator urged the industry to take part in the consultation and help shape guidance to best protect savers from financial risks arising from climate change and a transition to a carbon-neutral economy.
David Fairs, the regulator’s executive director of regulatory policy, analysis and advice, said: ‘Climate change is a core financial risk which pensions trustees must consider when setting out their investment strategy.
‘That’s why PCRIG’s guide is so important as it will help trustees demonstrate how they are taking this and other financially material considerations into account over the lifespan of their investments.’
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