Ralph McClelland, Partner at Sacker & Partners: Following the industry working group report earlier in the year, DWP has shown its continued commitment to the implementation of stricter climate related reporting for larger UK pension schemes by publishing today’s consultation. DWP’s key proposals would mandate Task Force on Climate-related Financial Disclosures (TCFD) reporting for pension scheme trustees. The DWP is targeting schemes with assets of £1bn or more, which casts the net widely. While many pension schemes are already some way down this road, implementing the proposals could pose challenges for trustee boards, particularly those with smaller schemes. Responses are due in by 7 October.”
Simon Jones, Head of Responsible Investment, Hymans Robertson, says: “Pension funds will only contribute to the mitigation of climate risk through the reallocation of capital or by driving changes in behaviour. This continued focus on climate risk is welcome and we are particularly encouraged that this consultation looks beyond just disclosure to the underlying actions that trustees are expected to take in developing their approach. Looking beyond the risks associated with climate change to the potential opportunities to influence or create change must become a part of asset owners mindset.”
Vassos Vassou, a professional trustee at Dalriada Trustees, said: “The DWP proposal on climate risk disclosures demonstrates the direction of travel of the industry. Trustees have had to deal with lots of recent changes over ESG and climate change but this goes one step further by asking the largest schemes to report against the TCFD framework. The investment managers of those schemes will in turn have to be supportive of what the trustees require. This will help change the behaviour of investment managers and will also put a spotlight on the trustees who will have to show what actions they have taken on climate change. I would hope too that the impact of these requirements will also trickle through to smaller schemes who often use the same investment managers.”
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