Written by Harrison Packer 

Many trustees will be familiar with the Task Force on Climate-related Financial Disclosure (TCFD) reporting requirements, which large schemes will already be complying with.  But what’s next for trustees when it comes to ESG reporting, and how can trustees get ahead of the game? 

The Pensions Regulator’s recent blog post suggests nature and social risks are the next focus areas for schemes’ ESG reporting. 

Trustees, take stock and plan for wider ESG risks and opportunities | The Pensions Regulator Blog

While the Regulator makes clear “there are no mandatory requirements to adopt recommendations from the UK Transition Plan Taskforce (TPT), Taskforce for Nature-related Financial Disclosures (TNFD) or Taskforce for Social Factors (TSF)”, it is implied that trustees should be familiarising themselves with these recommendations now.

The Regulator suggests trustees may wish to start building nature and social considerations into their statements and policies (e.g. their SIPs) and that it is worth engaging at this stage with their advisers, in order to understand how advisers can support trustees with ESG beyond simply climate change.

The takeaway message is that while the Regulator appreciates the challenge for trustees in complying with increasing reporting requirements, the requirements exist to drive genuine change in how schemes operate and “failure to account for climate-related risks and opportunities and, where material, nature and social factors, puts savers at risk”.

We recommend that trustees consider how they can start working these wider ESG considerations into their policies and procedures – much as has been done in relation to climate change – to get ahead of the game and any future reporting requirements in these areas. 

Burges Salmon are well placed to advise on all aspects of ESG in relation to pension schemes.  If you would like to explore this topic further, please contact Kate Granville Smith.