Govt group to draft trustee climate risk guidelines

The Pensions Climate Risk Industry Group (PCRIG) will draft guidance for trustees on climate risk using recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD)

PCRIG is formed of the Department for Work and Pensions (DWP) and the Department for Business, Energy and Industrial Strategy, alongside trustees, consultants, investment managers, civil society groups and representative bodies.

Chaired by Sackers partner, Stuart O’Brien, it seeks to provide guidance to pension trustees on managing and reporting climate risks.

PCRIG expects to publicly consult on the guidance in early 2020, after which TPR will incorporate the key requirements into the governance code required by the Occupations Pension Schemes Regulations 2019.

It also plans to provide additional guidance on best practice, to help ensure that trustees are meeting the standards of the government’s Green Finance Strategy, which expects all listed companies and large asset owners to disclose in line with the recommendations set out by TCFD by 2022.

Commenting on the announcement, PCRIG chair and Sackers partner, Stuart O’Brien, said: “Pension trustees are already under a legal duty to consider factors which are financially material to their investment decision making. Managing the financial risk of climate change is no exception.

“However, to date, the way in which trustees might approach this has not been universally understood or acted upon.

“The role of the Pensions Climate Risk Industry Group is to provide practical and accessible guidance to help trustees of all schemes integrate, manage and report on climate risk as part of their investment governance – and to use the TCFD framework as a tool to do so.”

PCRIG hope that its guidance will build on the TCFD framework and will expose climate-related financial risks and opportunities for its to be managed.

Pensions and Lifetime Savings Association, which has been named as a member of the group, policy lead for investment and stewardship, Caroline Escott, added: “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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