2. โI donโt want to hear any more that โclimate change is important,
but we leave it to our investment managersโโ
London Climate Action Week 2019
โPensions should be harnessed to fight the climate emergencyโ
Times editorial, May 2019
โthere are real financial risks resulting from climate change.
With the long-term horizons of pension investing, trustees must
now consider that when they set out their investment strategies.
Trustees who do not consider those matters will be breaching
their statutory and potentially their fiduciary duties not only to
current but future members.โ
Parliamentary debate, May 2019
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3. Expectations
โข In June Parliament passed legislation to
move towards net zero carbon emissions by
2050
โข Green Finance Strategy - by 2022, large
pension funds will be publishing climate-
related financial disclosures
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4. Distinctive elements of climate risk
โข Far-reaching impact in breadth and magnitude
โข Foreseeable
โข Irreversible consequences
โข Dependency on short-term actions
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5. Three ways in which schemes affected
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physical transition litigation
6. 2019 DC governance survey
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will review this?consideration of climate change
7. October 2019 requirements
โข policies in relation to financially material considerations (including on
ESG considerations, such as climate change)
โข the extent (if at all) to which membersโ views on non-financial matters
are taken into account in investments
โข stewardship of investments, including engagement with investee
firms and the exercise of voting rights
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8. October 2020 โ DC implementation report
intent action
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9. Guidance
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10. Questions to consider includeโฆ
โข Have trustees discussed an approach to climate-related risks and opportunities?
Will such a discussion happen at least annually?
โข For DB, has the trustee board considered how the scheme sponsor might be
impacted by climate risk?
โข Have trustees discussed with advisers the impact of climate risk on the schemeโs
portfolio, both transitional risks and potential physical damage under different
climate scenarios?
โข Do you plan to monitor and oversee advisersโ and managersโ approach to climate
change, to ensure consistency with the schemeโs SIP?
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11. Positive signs
Hymans Robertson:
โข 96% are ready for new rules
โข 80% reported implementation challenge
โข โTrustees need to continue to question
their investment managers and their
advisers, recognising that challenge can
be a catalyst for improving standardโ
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Sackers:
โข 85% have updated or will update
their SIP
โข 13% have made or intend to
make material changes to their
investments following the review
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