“The UK is set to be the first major economy to require climate risk to be specifically considered and then reported on by pension schemes”, says Guy Opperman, Minister for Pensions and Financial Inclusion 2021.


The measures announced by the Minister will require schemes to assess and report on the financial risks of climate change within their portfolios. This commitment from the UK government is sending a clear message to UK pension trustees that this is an area that needs to be taken seriously.


These requirements will be in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations - a framework for disclosing how climate-related risks and opportunities are measured, monitored and managed by companies, asset managers and asset owners. The framework aims is to:


It is widely believed that in the near future similar regulatory requirements will be implemented within the Local Government Pension Scheme (LGPS).


Mercer is fully supportive of early adoption of the framework and believe that now is the time for LGPS Funds to start planning for TCFD reporting. We have therefore prepared the following checklist against each of the TCFD requirements to help support you.


This checklist is designed to give you a high level understanding of what you will need to do to meet TCFD reporting requirements. It highlights keys areas to focus on in what is likely to be a long and complex journey.

TCFD reporting checklist:

  • Governance



    Our Investment Strategy Statement includes our beliefs and approach to climate change


    Our Committee meet regularly to consider climate change-related issues


    Our Fund has sufficient climate change monitoring arrangements in place


    We have assigned climate change-related responsibility to Officers and committees


    We have considered and agreed upon the level of knowledge and frequency of training required


  • Strategy



    Our Fund has formed a view on short, medium, and long term climate change-related issues that could have a material financial impact on our Fund 


    Our Fund has distinguished whether the climate-related risks are transition or physical risks


    We have identified whether climate change related risks and opportunities have impacted our investment strategy. For example, where the Fund has made commitments to sustainable investments


    Our Fund has undertaken climate change scenario analysis (2⁰C, 3⁰C and 4⁰C scenarios etc.) to understand climate change impacts at the total Fund and asset class level


  • Risk Management



    Our Fund has processes for identifying and managing climate change-related risks

    For example:

    • Climate change scenario analysis
    • Carbon footprint analysis
    • Engagement activity with fund managers
    • Fund’s risk register considers climate risk


    Climate change is integrated into our organisation’s overall risk management framework

    For example:

    • Impact on asset-liability funding discussions
    • Include climate change and ESG risks alongside other material risks in the ISS


  • Metrics and Targets



    Our Fund employs metrics used to assess climate-related risks and opportunities in each fund or investment strategy. For example, carbon footprint metrics


    Our Fund has set targets.  For example, emissions reduction targets, sustainable allocation targets, etc.



We are already working with a number of LGPS clients to map their route to assessing and reporting on the financial risks of climate change within their Funds. If you would like to find out more about the work we are doing, or have any questions on the journey you will be taking, please contact us.

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