Trustees that fail to comply with required disclosures on climate change will face enforcement action, the Pensions Regulator has warned.
As part of its new climate-change strategy, published Wednesday, the regulator called on retirement plan trustees to act now "to protect savings from climate risk."
"In recent times we've faced a crisis caused by a pandemic," CEO Charles Counsell said in an introduction to the strategy.
Likening climate change to the challenges posed by the coronavirus outbreak, Mr. Counsell said, "Climate change could be — no, it will be — more catastrophic to our way of life than the pandemic if left unchecked. There is no vaccine, it is much more complex than that. It is equally urgent."
The regulator expects plans to publish their Statement of Investment Principles, which sets out policies on financially material ESG considerations, the extent to which non-financial matters are taken into account in investment decisions and their policies on stewardship, and their implementation statement, which describes whether certain policies in the SIP have been followed and outlines trustees' voting behavior. Large asset owners must also by 2022 disclose certain information in line with the Task Force on Climate-related Financial Disclosures recommendations.
"Where they do not, and it is appropriate to do so, we will take enforcement action, which we may publicise. These disclosures represent compliance with the basics on climate change," the strategy said.
"Driving trustee action on the risks and opportunities from climate change will create better outcomes in later life for workplace savers," David Fairs, executive director of regulatory policy, analysis and advice, said in a statement accompanying the strategy document. "Driving trustee action on the risks and opportunities from climate change will create better outcomes in later life for workplace savers."
The regulator plans to publish guidance to help retirement plans to comply with the new rules and make the consideration of climate-change risks and opportunities part of their systems of governance. It will also update content on climate change in its Trustee Toolkit, an online learning program aimed at trustees.
Further, TPR will publish a "climate adaptation report" by November — ahead of the United Nations climate change conference, known as COP26 — which will outline its own plans toward using the TCFD recommendations as a framework for its own management of climate risk.
The regulator has set itself a 2030 net-zero carbon emissions target, and will set out plans on how to achieve this goal by 2024. "This will demonstrate that we are taking part in the transition," the strategy said.