The public body wants trustees and advisors to take part in an eight-week consultation to help play a key part in the guidance.
New guidance that has been designed to assist trustees meet tougher standards of governance in relation to climate change risks and opportunities has been launched for consultation by The Pensions Regulator (TPR).
As part of this, TPR wants trustees and advisors to take part in an eight-week consultation in order to play a key part in shaping the guidance.
The consultation also comprises the publication of a new appendix to TPR’s monetary penalties policy (MPP), which details its approach to rolling out penalties for non-compliance.
Once the consultation ends on August 31, from 1 October trustees of certain schemes will face new requirements that will help to improve the quality of governance and reporting as they address climate-related risks and opportunities.
The governance details what trustees will need to do and report on in order to comply with the new legislation.
In addition, trustees who are not subject to the new requirements may look to follow the guidance in order to improve the governance and resilience of their schemes in relation to climate change risks and opportunities.
Commenting on the guidance, David Fairs, TPR’s executive director of regulatory policy, analysis and advice, said: “If trustees do not adequately consider climate-related risks and opportunities, or exercise effective stewardship, pension scheme investment performance and funding may suffer, which could mean savers missing out.
“We want to work with trustees, and their advisers, to ensure climate-related risks and opportunities are considered as key elements of scheme governance and we would welcome feedback on the best way to deliver this.
“We are planning a range of events to engage with stakeholders on issue of climate-related risk over the coming weeks. These will help ensure stakeholders are able to feedback directly to us throughout the eight-week consultation period.”
What the MPP means
Where trustees in scope of the legislation fail to publish a climate change report on a publicly available website, accessible free of charge and within the time frame required, TPR must issue a mandatory penalty charge of at least £2,500.
However, for any other breeches of the new regulations, TPR has a range of enforcement options such as the discretion to issue a penalty notice.
The MPP also understands that all the information trustees may need will not be available immediately. With this in mind, TPR expects trustees to provide a full explanation by setting out the efforts they have made to obtain the necessary climate-related data, as well as how they plan to overcome obstacles.