Climate risk reporting is now mandatory for pensions funds holding more than £1bn in the UK, making it the latest segment of UK’s financial sector now required to produce governance processes and disclosures in line with the Task Force on Climate-related Financial Disclosures (TCFD).
Under the rules, which came into force on 1 October, pensions trustees need to calculate and report on a portfolio alignment metric, which gives the alignment of the scheme’s assets with the Paris Agreement goal of limiting global warming to 1.5C above pre-industrial levels.
The Pensions Regulator (TPR) has published updated guidance which sets out what trustees need to include in their annual climate change report to comply with the new legislation. It provides examples of how to apply the regulations and the Department for Work and Pensions’ (DWP) statutory guidance.
The government is phasing the introduction of climate risk reporting across the pensions sector. Trustees