The Regulator has updated its guidance to help trustees meet new climate reporting rules. The two sets of Climate Change Governance and Reporting Regulations introduced new requirements, initially applying to trustees of authorised master trusts and schemes with net relevant assets of £5 billion or more from October 1, 2021. From October 1, 2022, the rules also apply to trustees of schemes with net relevant assets of £1bn or more. The DWP will consider extending these rules to smaller schemes in 2023. The Regulations are being amended so that trustees will need to calculate and report on a portfolio alignment metric for any scheme year ending after October 1, 2022. This is outlined in the Regulator’s updated guidance.

The Regulator expects trustees to have sufficient knowledge and understanding to be able to identify, assess and manage climate-related risks and opportunities for their scheme. While acknowledging this may be challenging for some trustees, the Regulator’s guidance includes an illustrative example charting how trustees of a fictitious pension scheme might approach meeting the requirements of the regulations, including the new portfolio alignment metric.