LCP reaction to
new consultation around trustee duties on climate change

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The Department for Work and Pensions has today launched a consultation setting out firm proposals for mandating the existing Government expectation that large schemes will disclose their approach to managing climate risks and opportunities by 2022. 

Claire Jones, Head of Responsible Investment at LCP, commented: 

“Trustees shouldn’t be fooled by the words “governance” and “reporting” in this consultation. This consultation is about action. It sets out the areas that government expects trustees to cover when assessing and managing the risks and opportunities from climate change. While it is geared towards larger schemes, it will also inform good practice for smaller schemes. Fundamentally, it means that climate change can no longer be seen as a bolt-on to ESG considerations; it has to be a consideration that is integrated across all aspects of pension scheme management.

“Although many schemes and employers are struggling with the impact of Covid-19, that is no excuse to defer action on climate change which – in the longer-term – poses a much greater threat to pension scheme finances. The proposals will require a step-change for many schemes, so those expected to be within scope should review their climate approach against the proposed requirements and start addressing any gaps, particularly in relation to scenario analysis, metrics and targets.”

For more LCP analysis on what the consultation means please read here