U.K. Department for Work and Pensions proposed an amendment to the upcoming Pensions Schemes Bill that would require retirement plan executives disclose how they invest to mitigate the impact of climate change, DWP said Wednesday.
The amendment follows a meeting last week between Therese Coffey, the U.K. secretary of state for work and pensions and a member of Parliament; and Mark Carney, governor of the Bank of England, who called on pension funds to increase efforts to mitigate the financial risks of climate change.
Under the planned amendment to the bill, asset owners in the U.K. will be required to additionally report on strategies they undertake to mitigate climate change, rather than solely how they implement environmental, social and governance factors into their portfolios. The bill was first proposed in October.
DWP said Wednesday it would first consult on the proposal. The disclosures are intended to be made in line with recommendations set by a voluntary framework of reporting guidelines, developed by the Task Force on Climate-related Financial Disclosures. Set up in 2015, TCFD reporting standards are universally used by banks, companies and investors.
"We've already introduced regulations that require pension trustees to set out their policy on climate change, but now we're taking things a step further," Ms. Coffey said in a news release Wednesday.
Since Oct. 1, trustees of U.K. pension funds have been required to outline in their investment policies and principles how they incorporate ESG factors and present financially material ESG considerations over the lifespan of their plans' investments.
Also under the current rules, beginning Oct. 1, 2020, trustees will have additional obligations. They will be required to produce an implementation report setting out how they acted on the principles outlined in their policies; and their plans will have to present participants' views on non-financial matters, including their ethical views and their views on social and environmental impact as well as how trustees exercise voting rights and undertake engagement with their portfolio companies.
The U.K. government wants to bring all greenhouse gas emissions in the country to net zero by 2050.