Climate change developments in pensions law ahead of COP26

October 25, 2021
Helen Miles


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With the UK and Italy hosting the international UN climate change conference (COP26) in Glasgow from the 31st of October, a key area for discussion will be mobilising the power of finance.

Due to the wealth and influence commanded by pension funds, the Work and Pensions Select Committee has called on the UK Government to use the conference to secure international commitments on global harmonisation of climate-related financial disclosures.

This follows the government introducing new climate change governance and reporting requirements for pension scheme trustees earlier this year.

gunnercooke Pensions Partner Helen Miles comments on the recent changes and climate change pension opportunities:

“Pension scheme trustees have been mindful of their investment duties and how these may be affected by changes in the industries and funds they invest in.  Many available investment vehicles are keenly engaging with a green agenda and targets, including renewables, green technology, and minimising impacts on nature and biodiversity.

“This shift in focus has now been given greater impetus following new legislation, introduced in the Pension Schemes Act 2021 and subsequent Regulations. There are new requirements on pension schemes to take account of the risks and opportunities of climate change in their investments, governance, and reporting.

“Since October 2020, trustees of pension schemes with more than 100 members must produce an implementation statement explaining how they have followed and acted upon the policies, including those on climate change, set out in their Statement of Investment Principles (SIP).

“And in advance of COP26 we’ve seen the introduction of what the government has described as ‘world leading’ Climate Change Governance and Reporting Regulations 2021. This means larger occupational pension schemes and authorised master trusts must set climate-related targets from October this year.

“The UK is the first economy to mandate annual Task Force on Climate-Related Financial Disclosures (TCFD) reporting for its pensions sector. 

“Whilst no one can argue with the importance and opportunities for pension trustees relating to climate change, this is an addition to pension reporting and is backed up with powers for The Pensions Regulator to give directions to trustees, backed with financial penalties for non-compliance.

“It’s therefore vital that trustees seek legal advice around current and future legislative requirements, particularly with further alterations due to come into force in 12 months’ time.

“Much is still to be clarified, and the Work and Pensions Select Committee has rightly used its recent report on Pension Stewardship and COP26 to call for more certainty for pension schemes and other investors. It wants a UK climate roadmap, particularly to aid those investing in long-term investments such as infrastructure.  

“Change on such complex issues takes time but progress can be made by trustees working with their advisers.

If you have any specific concerns relating to your organisations’ Pension scheme, then contact Helen Miles: or your usual gunnercooke pensions partner.