We all know that the British government has committed to the Paris Climate Agreement but it is also pushing ahead earlier than many other developed nations with its climate change policy.
The government has confirmed that new laws are proceeding to force pension master trusts and schemes to review and regularly report on at least on an annual basis, the financial risks of climate change imposed on their investment portfolios.
From October 2021
All authorised master trusts (how many pensions are legally set up) and other pensions schemes with £5bn or more in assets (pretty much most pension schemes) will be required to report on climate risks on their portfolios with action plans to reduce any risks.
By this time, 70% of pension schemes covering 80% of pension scheme members will have been through their climate risk reporting requirements.
October 2022 to October 2024
During the period, governments and regulators will be data gathering on schemes to draw up lists of best practice and indeed poor practice such as ‘greenwashing’ to formulate further guidance to pension and investment firms.
October 2024 onwards
Measures will be extended to increase scrutiny of climate risk on pensions and investments based upon the results of good practice research between today and 2024.
UK Leads Way
The UK is the first of both the G7 and G20 nations to commit to establishing a “Taskforce for Climate Related Financial Disclosures” (TCRFD). The taskforce will ultimately direct efforts in the UK to our target of carbon neutral.