“Though we broadly agree with the breakdowns for familiarisation, scenario analysis, metrics and producing the report, the impact assessment does not reflect the outlay schemes will face in the first year of compliance. We must be mindful that most pension schemes won’t have the required governance, strategy and risk management processes in place at present and, while fiduciary duty requirements means schemes are taking climate change into account as a material risk, the processes required as per the regulations are very specific and will see most schemes having to establish new processes.
“With this in mind, we would urge the DWP to undertake a survey after the first year of regulatory compliance, asking what the actual costs have been in terms of additional trustee, in-house, consultant and asset manager time and resource.
“Another area we believe should be given greater weighting in the non-statutory guidance is that of promoting industry collaboration as best practice. Our own experience with initiatives such as the Investment Consultants Sustainability Working Group (ICSWG) has reaffirmed our belief that the regulator should, wherever possible, endorse a collective responsibility for continuous improvement by the industry.
"We believe providing resources and support to trustees should therefore be a key focus in the initial years of implementation. We would encourage the Pensions Regulator to share examples of innovative approaches to embedding the recommendations of the TCFD as part of this support, ensuring that disclosure in this space leads to real-world change to address the challenges and opportunities of climate change."
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