In 2017, the TCFD published a framework through which exposure to climate-related financial risks can be assessed, reduced, managed and disclosed. It recommends disclosures should be made under the four broad headings of governance; strategy; risk management; and metrics and targets.
The new working group has been set up to explore the recommendations from the TCFD and provide guidance for assets owners to support them in complying with the 2022 requirements outlined in the Green Finance Strategy.
It includes representatives from the Department for Work and Pensions, the Department for Business, Energy and Industrial Strategy, The Pensions Regulator (TPR) and a number of other pensions industry and civil society bodies. The Group is chaired by Stuart O’Brien, a partner at Sackers and who was also a member of the Taskforce which produced the PLSA’s recent ESG and Stewardship guidance.
The PLSA is committed to supporting schemes to implement best practice on environmental, social and governance (ESG) matters, including climate change and has been involved in a number of initiatives to support improved understanding and disclosure in the pensions industry.
First published in December 2017, the PLSA’s Climate Risk Guide recognises the severe risk posed by climate change and provides a framework for pension funds to act. More recently, the PLSA has also published ESG and Stewardship: A practical guide to trustee duties.
Caroline Escott, Policy Lead for Investment and Stewardship and the PLSA’s representative on the TCFD working group, said: “The PLSA is proud of its record to date on helping the industry understand the impact of climate change on their investments as well as its work to mitigate the impact on the value of individuals’ retirement savings and disclosing these risks to end savers.
“Ultimately pension funds have a duty to invest their assets in line with the best interests of their members. Increasingly, research has shown that companies that are more environmentally aware and have strong social and governance policies in place, tend to outperform those that do not. It is also widely acknowledged that climate change poses a severe risk to investment portfolios and it is firmly in schemes’ and savers’ interests to seek to address it.
“I look forward to working closely with industry colleagues to provide guidance for schemes of all sizes on using the TCFD framework to help them manage and report on climate risk.”
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