Regulatory Updates

Climate change reporting requirements

Under the Task Force on Climate-related Financial Disclosures (TCFD) requirements, pension schemes with assets in excess of £1bn will be required to undertake scenario analysis to understand the potential impact of climate change on its funding strategy. In addition to considering funding and investment risk, the scenario analysis must include the impact on the covenant as far as that is possible.

Whilst this increases governance obligations for pension schemes, it will also facilitate the development of a more holistic understanding of their exposure to the increasing threat of climate change, as has only been best practice until now.

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