TPR Issues ESG Risks, Opportunities Guidance for Trustees

The UK’s Pensions Regulator (TPR) has suggested trustees should “familiarise themselves” with recommendations from the UK Transition Plan Taskforce (TPT), the Taskforce for Nature-related Financial Disclosures (TNFD) and the Taskforce for Social Factors (TSF). This formed part of a wider call from TPR for trustees to continue improving their understanding of wider material ESG considerations. This includes assessing their inter-relationship with climate change and being willing revise scheme policies if needed. TPR also flagged the importance of transition plans in providing a pathway to achieve sustainable investment. It noted that good plans could support trustees in integrating risks and opportunities into investment valuations, and improving data to make informed investment decisions – thereby increasing capital allocation to climate solutions. TPR said the TPT disclosure framework and guidance offered resources to support the production of “credible, consistent and comparable” plans. At the World Economic Forum last month, 320 organisations from more than 40 countries, accounting for US$14 trillion in assets under management, committed to making nature-related disclosures based on TNFD recommendations. TPR recommended trustees should consider becoming early adopters of the scheme, build on previous experience and increase collaboration to share knowledge with others. “Pensions operate in a complex world and trustees are increasingly being asked to grapple with new risks and grasp new opportunities,” said Mark Hill, Climate and Sustainability Lead at TPR. “But the role of a trustee fundamentally remains to act in members’ best interests.”

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