After 10,000 years of relative stability in the Earth’s climate, latest scientific research suggests that uncurbed, human activity could lead to global temperature rises of more than 4°C from pre-industrial levels.[1] Physical risks arising from this include heat waves, flooding, droughts and rising sea levels.
In order to reduce the risk of the worst of these potential outcomes, the 2015 Paris Agreement set out a global goal of limiting temperature rises to well below 2°C. Achieving this will require significant changes to the world economy and a move away from a reliance on fossil fuels that brings a range of transition risks.
In recent years, trustees of the larger pension schemes in the UK have been required to prepare climate-related disclosures (sometimes referred to as Task Force on Climate-Related Financial Disclosures (TCFD) reports), which capture ways in which the schemes are looking to address the scheme-specific climate risks. Whilst the smaller schemes are currently out of scope for producing climate-related disclosures, The Pension Regulator’s General Code that came into force in March 2024 requires trustees of schemes of all sizes to better understand the risks posed by climate change.
Understanding the implications of climate change can feel like a mammoth task as it spans so many different areas: investment, governance, covenant implications, liability impacts and member considerations, and understanding the potential implications of each is important, but we believe they are best considered in a coherent and integrated manner. Our team works with specialists from across our business to help trustees and corporates understand the issues, comply with legislative requirements and more broadly consider how schemes can go further to quantify and address the risks and opportunities arising from climate change.
To find out more about how we can help your pension scheme and the climate services we offer, please see our short brochure below.
Footnotes
Download
| Title | File Type | File Size |
|---|---|---|
| Climate support for UK pension schemes | .3 MB |
