Hogan Lovells

Key Dates

Consultation document issued on 26 August 2020.  Consultation closes on 7 October 2020.

Further consultation is expected on regulations before they are laid next year.

Pensions Climate Risk Industry Group (PCRIG) draft non-statutory guidance issued for consultation in March 2020.  Final guidance is expected at the end of 2020.


Summary

The DWP has issued a consultation paper aimed at embedding in pensions law the recommendations of the Task force on Climate-related Financial Disclosure ("TCFD"). The consultation paper will be followed by consultation on draft regulations and statutory guidance.  The regulations are expected to be made in 2021.

The proposals in the consultation paper are intended to be in line with the government's Green Finance Strategy and its expectations of large asset owners in relation to TCFD (for more information, please see Background below). The government also intends to consult in future on mandatory reporting on the alignment of an investment portfolio with the goals in the Paris Agreement (please see below).

Climate change: timing and scope of new requirements

Key proposals for new requirements

New requirements: guidance

New requirements: penalties for non-compliance

Background: Paris Agreement

The UN Framework Convention on Climate Change dealing with greenhouse-gas emissions mitigation, adaptation and finance 2016 made a commitment to hold the increase in global average temperature to below 2° Celsius above pre-industrial levels and to pursue efforts to limit the increase to 1.5° Celsius above those levels (known as the “Paris Agreement”).

Background: Task Force on Climate-related Financial Disclosures (TCFD)

Background: UK government Green Finance Strategy (July 2019)

Reminder: climate change provision in the Pension Schemes Bill

The Pension Schemes Bill (currently before Parliament) will insert new sections 41A – 41C in the Pensions Act 1995.  The new provisions will enable the Secretary of State to make regulations to require occupational pension scheme trustees to:

disclose information on the effects of climate change on their scheme in accordance with prescribed requirements. 



Date Accessed: 03/12/2021