UK to make pension schemes mitigate against climate risks

The new regulations, subject to Parliamentary debate, will affect all authorised master trusts and schemes with £5 billion or more in assets from October 2021 onwards.

Minister for Pensions, Guy Opperman, said: "Climate change is the number one issue of our generation, and as such, it carries a material risk to our financial investments.

"These world-leading regulations we outline today ensure these risks are accounted for, and are done so with total transparency.

"In a matter of just a few months, savers will be able to determine for themselves if the investment aligns with their values or if they are comfortable with how their pension could be affected by climate change."

Amanda Latham, policy and strategy lead at Barnett Waddingham, commented: “New climate regulations for pension schemes are coming in thick and fast, and pension schemes have no choice but to sit up and take notice. If the UK’s legal obligation to achieve a Net Zero economy by 2050 wasn’t enough, the Task Force on Climate-related Financial Disclosures (TCFD) shines a spotlight on pension trustees, who are being urged to pick up the pace and act collaboratively.

"There is huge consumer demand for greener investment decisions, and the scale of the pensions industry means it’s perfectly placed to support the transition to a more resilient, fairer, and lower carbon economy. For those that choose not to act, the consequences will be notable – both on the bottom line, and on our global environment.”