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.
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.’
