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Sustainability and UK pension schemes: Preparing for the new TCFD requirements

The UK government’s TCFD roadmap outlines steps towards mandatory climate reporting requirements across the UK economy aligned with the recommendations of the Taskforce on Climate-related Financial Disclosures, aiming to ensure that information on climate-related risks and opportunities is available throughout the investment chain. UK pension schemes have a leading role to play: new regulations aim to leverage the GBP2 trillion in assets under management in private pension arrangements, starting with the very largest schemes and master trusts from 1 October 2021.

Risk is the focus – but when pension scheme trustees seize opportunities to decarbonise and therefore reduce climate risk in their portfolios we unleash the productive power of our pension funds. They can be at the forefront of seizing sustainable opportunities – in the financial interests of their members – by financing the green tech and green energy revolution we will need for the transition

‘Taking action on climate risk: improving governance and reporting by occupational pension schemes’ - UK Department for Work and Pensions, July 2021

Many of the schemes that are in scope of the first wave of the regulatory roll-out have voluntarily adopted some of the processes and activities that will now be mandated; for other schemes, challenges lie ahead.

TCFD in 2 minutes

If you’re unfamiliar with the regime, we recommend starting with our ‘TCFD in 2 minutes’ video for a quick overview of the pensions TCFD requirements.

TCFD in 2 minutes

Key considerations for trustees

Click below for an overview of each of the key areas of the new regime with tips on how to get started and links to further resources.

Trustee knowledge and understanding

What trustees need to know before their scheme’s in-scope date.

Governance and risk management

Trustees’ overarching duties in relation to scheme governance, strategy and risk management.

Scenario analysis

The requirements, practicalities and potential flexibilities for trustees as they approach this complex task.

Metrics and targets

Trustees’ duties in relation to choosing, monitoring and reporting on climate change-related metrics and targets.

Reporting and disclosure

The new annual report will show members, the Pensions Regulator and others how your scheme is dealing with the risks and opportunities presented by climate change.

Steps trustees need to take

The diagram below sets out an overview of key actions and timelines. For more information or to arrange training on the regulations and how they apply in the context of your scheme, please contact one of our experts.

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