The draft Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 and the draft Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021) (‘the Regulations’) have been produced in light of the outcome of an earlier August policy consultation ('the August consultation'). 

This sought views on policy proposals to require trustees of larger occupational pension schemes and authorised schemes to have effective governance, strategy, risk management and accompanying metrics and targets for the assessment and management of climate risks and opportunities.  The August consultation also invited responses on proposals to disclose these in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). 

The draft Climate Change Governance and Reporting Regulations will require, from 1 October 2021, the trustees of schemes in scope to:

• implement climate change governance measures and produce a TCFD report containing associated disclosures; and
• publish their TCFD report on a publicly available website, accessible free of charge

Changes made by the Miscellaneous Provisions Regulations will require trustees who must produce a TCFD report to, among other things:

• include a link to the TCFD report in the Annual Report
• tell members that the TCFD report has been published and where they can locate it, by including this information in the Annual Benefit Statement and, for defined benefit (DB) schemes, the Annual Funding Statement

Concurrently the DWP also seeks views on new draft statutory guidance (link to DWP website) that would enact the government’s policy proposals. Trustees of occupational pension schemes must have regard to this statutory guidance when meeting requirements under the Regulations. The guidance is split into four parts covering: 

• Background
• An overview of climate change governance requirements
• Climate change governance and production of a TCFD report
• Publication of a TCFD report

Non-statutory guidance (link to DWP website) for the trustees of occupational pension schemes on assessing, managing and reporting climate-related risks in line with the Taskforce on Climate-Related Financial Disclosures (TCFD) has also been produced by the Pensions Climate Risk Industry Group (PCRIG). This is non-mandatory guidance but might be helpful for trustees to consider in addition to the statutory guidance which must be followed.

The consultation closes at 11:45pm on 10 March 2021 and can be accessed from the DWP website.