17% of pension scheme trustees unprepared for new climate requirements

Nearly one fifth (17 per cent) of pension scheme trustees feel unprepared for the forthcoming Task Force on Climate-related Financial Disclosures (TCFD) reporting requirements, according to analysis from LCP.

Schemes with more than £1bn of assets will become subject to the new reporting requirements from 1 October 2022, following on from the introduction of the same requirements for schemes with £5bn or more in assets in October 2021.

Under the new requirements, trustees must have a system of climate governance in place by 1 October, whilst managers will be required to start identifying and collecting the right metrics ahead of the scheme end on 31 March 2023 and before the full report is submitted on 31 October 2023.

However, LCP’s survey found that just 60 per cent of trustees felt that they were on track with making the necessary preparations ahead of these looming deadlines, with just 4 per cent feeling ahead of the game.

In light of the lack of preparation, and based on its experience with the first wave of schemes, LCP has identified five key factors for trustees to consider, including planning ahead and understanding the deadlines.

Indeed, LCP suggested that there has been some misunderstanding of which deadlines apply to different areas, arguing that it is "essential" to understand as well as know how many meetings trustees have before key deadlines to progress the necessary work.

In addition to this, the consultancy recommended establishing roles and responsibilities, such as introducing a sub-committee or working group, undertaking early training for all working groups, and finding an adviser to help identify agendas and deadlines.

Trustees were also urged to get tackling metrics and data early, as LCP stressed that there needs to be a crucial period of engagement with managers upfront so that data can be provided as early on as possible.

LCP investment team partner, Dan Mikulskis, commented: “While it can be tempting to dive straight into the data, establishing the right governance structures is the most important first step in the TCFD process.

"Trustees must take a step back and ensure roles and responsibilities are clear from the outstart. Climate risks also need to be integrated into existing risk frameworks so that they can be managed and measured effectively.

“October can seem like a distant deadline but in fact, it only allows for one or two meetings to take place. To keep on track, it is important to get an advisor on board to help manage the reporting process and set interim targets to ensure deadlines are met.

"Furthermore, it is critical to understand the metrics required early on, as TCFD often acts as checklist so that can help firms understand and put the right practices in place ahead of the reporting deadline in October 2023 and beyond.”

    Share Story:

Recent Stories


Making pension engagement enjoyable through technology
Laura Blows speaks to Nick Hall, business development director and Chartered Financial Planner at UK-based Wealth Wizards about the opportunities that technology provides for increasing people’s engagement with pensions and increasing their retirement wealth.

ESG & DC – creating the right tools
In the latest of our series of Pensions Age video inteviews Francesca Fabrizi, Editor in Chief of Pensions Age is joined by Manuela Sperandeo, Head of Sustainable Indexing EMEA, BlackRock and Mark Guirey, Executive Director, Asset Owner and Consultant Coverage - MSCI to discuss some key trends of ESG investing among UK pension funds today

Multi asset credit
Pensions Age editor, Laura Blows, discusses multi asset credit with Royal London Asset Management senior fund manager, Khuram Sharih
Pensions Age podcast: buy-outs and buy-ins for member and employer nominated trustees
Pitfalls and good practice when approaching insurers with Pensions Age editor, Laura Blows, Martin Parker (Just Group) and Akash Rooprai (ITS)