P4P Peers have secured provisions in law that will ensure new pensions regulations on climate risk disclosure take account of the UK’s climate goals. The new regulations will require the 100 largest workplace pension schemes - with £5bn or more in assets, as well as all authorised master trusts – to publish climate risk disclosures by the end of 2022. Using these schemes to set an industry standard, about 250 more schemes with £1bn in assets would have to meet the requirements in 2023. With the roll out to schemes of £1 billion or more in assets, more than 75% of assets, and 80% of members, would be in schemes subject to the requirements. HMG proposes to take stock in 2024 and consult on the extension to all other schemes.
DWP launched a consultation on the new Regulations following the passage of the Pension Schemes Bill through the House of Lords. P4P Peers also secured assurances that the Government would take the broadest possible approach to considering climate risks, including transitional, physical, financial and systemic risks, and that it would act fast to put new Regulations in place. Pension trustees need clarity, so peers’ aim was to send a clear signal on the long-term trajectory the sector needs to take.
The Minister Baroness Stedman-Scott also acknowledged the positive impact measure can have on the UK economy: “Tackling climate change will be a win-win, as many of the actions we need to take to reach our UK climate targets, net zero included, will also support our economy as we emerge from the Covid-19 emergency.”
The Bill represents the first ever mention of climate change in pensions legislation and the new Regulations are only a first step. While more challenging, the sector now needs a roadmap to align investments themselves with net zero.
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