Written by Kate Granville Smith and Katy Dixon

On 11 April the Pensions Regulator (TPR) published a press release on their review of how pension trustees are addressing climate risks and opportunities through their climate-related disclosure reports.



TPR reviewed 30 climate-related reports relating to scheme years ending between 1 October 2022 and 30 September 2023. This number represents 10% of total reports published which relate to that period. 

In relation to the 4 areas of governance, strategy (including scenario analysis), risk management and targets, TPR sets out:

  • good practice it has observed- aspects which may not be legally required but which it considers make the reports more useful;
  • issues it has observed- includes aspects it considers indicative of weaker climate-related risk management or elements that made reports more difficult to understand; and
  • ways to improve future reports.

In terms of general observations, TPR noted that:

  • Over 60% of schemes sampled had a net zero goal with a 2050 or earlier target date.
  • It was useful to include scheme information in the beginning of the reports such as scheme size, structure and funding level as this provided context for the rest of the report. 
  • It was useful to include the size of specific investment mandates  where relevant. 
  • A large number of reports included wording that was too generic and lacked specific examples. 
  • It was noted that in the reports of schemes which had previously published a report, some of the wording was reused. There is no issue with this provided the trustees ensure these sections continue to meet legal requirements.
  • Though the length of reports did not correlate to quality it was noted that most effective reports were concise. 
  • The inclusion of plain English summaries aimed at members were praised by TPR.
  • The identification of additional work needed should be included in the report so that this can be monitored and commented on in the next report. 

It is also useful to note that TPR recognises that not all schemes are exposed to climate risk to the same extent and as a general rule it expected climate-related risk to be  more material for DC schemes or immature DB scheme and less material for DB schemes that are very well funded or invested in assets that closely match their liabilities. It states that time and resources devoted to monitoring or managing climate change risk should be proportionate to the materiality of the risk. Where climate change poses a less material risk, not all of the points in its statement may be relevant or proportionate. 

Interestingly, TPR sets out some examples of the actions that trustees have taken to address climate risk and opportunities through their climate reporting:

  • updating DC default lifestyle strategies to include sustainable funds
  • increasing allocation to low carbon tracker funds, and/or to companies with ‘high levels of green revenue’
  • exploring climate opportunities such as forestry, green bonds and/or committing funds to private market renewables
  • articulating stewardship priorities on climate change mitigation, climate change adaptation and avoiding biodiversity loss
  • encouraging fund managers to engage with top carbon dioxide emitters
  • working with investment managers to obtain emissions data from additional asset classes such as property, infrastructure and hedge funds

Next Steps

We recommend trustees reflect on the points identified by TPR’s review. Although it is the largest pension schemes who are in scope for climate-related reporting, TPR reiterates that as climate change poses risks and offers opportunities to all pension schemes, trustees of schemes who are not subject to the reporting obligations may also benefit from its findings. 

We recently discussed how trustees can get ahead of the game with their ESG reporting and that TPR recently launched a campaign to ensure trustees are meeting their ESG reporting duties.

In  addition, the recently implemented General Code contains requirements for trustees related to ESG and reporting.  Burges Salmon are able to provide trustees  with a General Code ESG checklist to ensure they are meeting their ESG requirements, which include effective reporting through their climate-related disclosure reports. 

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.