Pension schemes to receive climate guidance in March

Pension schemes to receive climate guidance in March

The department for Work and Pensions is set to issue guidance in March to trustees on reporting the impact of their investments on climate change, pensions and financial inclusion minister Guy Opperman has confirmed.

The guidance sits within a programme of legislation intended to improve UK pension funds' stewardship of assets in the face of environmental, social and governance risks.

In October last year, new regulations requiring trustees to set out how they approach these factors in their statements of investment principles came into force.

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Research out this week found the majority of pension savers would like more information about where their assets are invested.

Schemes will see further rules requiring them to report annually on how they have addressed the concerns set out in the statements of investment principles, including how they incentivise their managers to take meaningful action, in October of this year.

Ahead of this the government will produce guidance on climate-related disclosures, a key strand of the new rules, with Mr Opperman confirming in parliamentary questions on Monday the intention to release these documents in March.

"With over £1.6trn in assets, UK occupational pension schemes have a significant role to play in supporting the government’s commitment to net zero by 2050," he said.

"Our environmental, social and governance regulations, introduced by this Conservative government in October 2019, mean that schemes are now required to disclose their policy on climate change.

"In March, we intend to publish game-changing guidance on climate-related financial disclosure. I have written to the 50 largest schemes in the country to urge them to act on their investment duties and to tackle climate risk."

Under questioning from MPs on both sides of the political spectrum, Mr Opperman said he was disappointed by the current state of stewardship in UK schemes.

"Sadly, too few schemes are making any form of disclosure about their environmental investments and their climate risk, and I am determined to change that. Every private occupational pension holder should be able to know, individually, how their fund is invested and be able to hold the trustees and asset managers to account," he added.

The minister also agreed to the principle of cross-party front-bench discussions between the governing Conservative party and opposition Labour party, after shadow minister Jack Dromey said "more can, and should, be done", calling for "a pensions summit of all those with power, urging them to discharge their responsibilities to clean up our world".

Mr Opperman said.: "I will wait to see the details of his proposals, but I would be delighted, subject to having read and considered them properly, to meet him and, at the very least, discuss how we take these matters forward."

Angus Peters is editor of Pensions Expert