Too few trustees and managers of defined contribution (DC) schemes are paying proper attention to risks and opportunities from climate change.
According to recently published research from The Pensions Regulator (TPR), the number of DC scheme trustees considering climate change in their investment strategies has doubled since 2019, but stands at just 43 percent.
The pre-COVID survey was carried out across 200 single-employer and multi-employer group schemes and 16 master trusts between January and March 2020, before the first national lockdown.
It found that of those schemes whose trustees had not considered climate change in their investment strategies, 19 percent were planning to review this, while 21 percent felt climate change was not relevant to their scheme.
David Fairs, TPR’s executive director of regulatory policy, analysis and advice, said: “The Pension Schemes Bill – which we expect will become law very soon – will see requirements for the effective governance of climate change risks and opportunities written explicitly into pensions law in the most comprehensive way to date.
“Trustees already need to consider climate change as part of their statement of investment principles, but the new act will significantly increase the expectations placed upon them.”
This spring, for the first time ever, TPR will publish a strategy setting out how it will help trustees meet challenges around climate change.