Aligning your pension scheme with the Taskforce on Climate-Related Financial Disclosures recommendations
By Department for Work and Pensions
This guide aims to help trustees evaluate the way in which climate-related risks and opportunities may affect their strategies.
Trustees should consider how different investments and strategies could be impacted by transition and physical risks, at an asset class, sector and firm level where appropriate.
Schemes should set out what risks and opportunities they consider to be relevant or material to them over the short/medium/long term time horizons for their scheme. They should use scenario analysis (see module 3 and associated quick start guide) as a helpful tool.
In developing mandates and selecting pooled funds, trustees should identify strategic actions to reduce exposure to climate-related risks, as well as options for investment in climate-related opportunities.
Growth assets are more sensitive to climate-related risks than income-generating assets, but this will vary by sector and firm preparedness –some sectors (for example renewables and electric vehicles) and assets (such as green infrastructure) will benefit from the low-carbon transition.
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