United Kingdom: Government publishes proposals in relation to considering climate risk

In brief

The Department for Work and Pensions (DWP) has published its response to the August 2020 "Taking Action on Climate Risk" consultation and its new consultation on the related draft legislation and guidance which have been produced in light of the outcome of the August consultation.


Contents

Whilst some of the technical details remain subject to consultation, including in relation to scenario analysis and metrics, the bigger picture remains the same; that by 1 October 2021, schemes with assets in excess of £5 billion, together with authorised master trusts and authorised collective money purchase schemes and by 1 October 2021, schemes with assets in excess of £1 billion, need to have appropriate governance arrangements in place to identify, assess and manage climate-related risks and opportunities and be preparing to publish annual TCFD reports. 

In addition, trustees of smaller schemes should be aware that whilst the DWP originally said that it would consider in 2024 whether to extend to the requirements to smaller schemes, it has brought forward that review to 2023. It is also the case that whilst the new statutory requirements will not yet apply to smaller schemes, the Government has made it clear that all trustees are expected to take action to address climate risk in line with their fiduciary duties.

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