Trustees need support for what is a major extension of their role as part of the move to improve pension scheme reporting on climate change, the Association of Consulting Actuaries (ACA) says.
In its response to the Department for Work and Pensions' consultation looking at proposals to require trustees to address climate change risks and opportunities - Taking action on climate risk: improving governance and reporting by occupational pension schemes - the ACA welcomed the department's response to practical issues identified in its previous paper but stressed the huge changes for trustees addressing this issue.
ACA climate risk group head and Isio partner Stewart Hastie commented: "It's clear that the government expects all schemes to start considering climate risks, with the larger schemes needing to disclose first. The guidance is intentionally aspirational at the current time - which we support - and helpfully this has been acknowledged with the repeated ‘as far as they are able to' provision.
"There remains a lot for trustees to take in and do. They will be relying on an industry that is still working out exactly what is available, what is relevant and how to assess the impact of future climate scenarios."
The ACA response noted that there remained a risk of spurious data gathering and calculations in this area - also expressing concern at the risk of a herd mentality when it comes to metrics and targets.
In addition, the ACA said it had some concerns around the possibility of disproportionately diverting trustee's resources away from focussing on other major pensions risks.
Hastie added: "The Pensions Regulator (and advisers) will have a major role to play in helping schemes understand what ‘good enough' looks like, especially over the next few years and whilst the Treasury's Task Force on Climate-related Financial Disclosures (TCFD) roadmap is implemented. We've already called for the regulator to produce an annual statement along these lines.
"However, we believe this a major opportunity to engage scheme members in their pensions savings. We suggest the inclusion of additional, non-statutory ‘best practice', guidance on how schemes could provide simplified but engaging information to members off the back of TCFD reporting to engage members in their benefits and climate change issues."
