The Pension Commission on Thursday issued guidelines to help UK pension trustees meet new standards for climate-related governance and risk and opportunity reporting.
Part of the trustees’ responsibility is to ensure that the outside advice they receive is relevant and competent, the regulator said in a press release.
“We recognize that the governance and reporting of climate-related risks is relatively new, so trustees may have to rely more on outside experts as they build their system’s capabilities in this area,” said David Fairs, Executive Director of Regulatory Policy. Analysis and Advice for TPR, in publication.
“Trustees need to take responsibility for ensuring that their advisors have the appropriate skills and knowledge, and that the advice they offer is relevant, helpful, and inexpensive. After all, it is the trustees who are responsible for all decisions, ”Fairs said in the release.
The final guidelines and new reporting requirements will apply to pension funds with assets of £ 5 billion ($ 6.6 billion) and will be expanded to include funds of £ 1 billion or more from October 2022, smaller funds in 2023. Step-by-step instructions are planned for 2022.
Mr. Fairs said in the press release that the guidelines “provide an opportunity for all trustees to improve the structures and governance of their system in relation to climate-related risks and opportunities in preparation for an enlargement”.
TPR said it would look for “clear evidence” that trustees adequately consider climate change in making decisions, conducted this analysis in accordance with the recommendations of the Task Force on Climate-related Disclosure, and seriously assessed the risks and opportunities of climate change for their pension funds relevant. The trustees must disclose this analysis and report on goals that have been set in order to achieve the resulting goals.
The guidelines cover both the requirements and the instructions of the agency. Enforcement measures may arise in the case of statutory regulations if trustees fail to comply. Any other steps recommended in the guidelines would require the trustees to explain their reasons for choosing a different approach.
Nigel Peaple, director of policy and advocacy at the London-based Pensions and Lifetime Savings Association, said in a separate statement that the trustees of this plan need more guidance and tools to address climate-conscious investments as soon as possible. “We would like to see more guidance provided to trustees in both the toolkit and the issue of the Covenant guidance – the employer’s legal obligation and financial ability to support the program now and in the future, while at the same time introducing new risks of climate change with accuracy. “said Mr. Peaple.