TPR publishes Climate Change Strategy
TPR published its Climate Change Strategy on 7 April 2021 which gives greater clarity to trustees for upcoming climate-change related regulations.
“Climate change and global moves toward low carbon economies will have a fundamental impact on many, if not all, employers and a strong covenant and a sustainable employer are likely to go hand-in-hand. As such, we thoroughly welcome The Pensions Regulator’s recognition in its new Climate Change Strategy that integration of covenant, actuarial and investment risk is key to successful outcomes.
However, we believe that TPR’s current approach fails to fully recognise that trustees of DB pension schemes have a unique role as the only investor with a material reliance on one counterparty, their employer covenant, with a consequently higher level of risk and responsibility in how that employer faces the climate crisis. Trustees may quickly find themselves at the forefront of influencing corporate sustainability in both their sponsors and their investment portfolios, and we look forward to greater clarity on how DB scheme trustees should manage these issues in upcoming amendments of the Code of Practice and Trustee Toolkit.”
Michael Bushnell, Managing Director, Lincoln Pensions