The UK’s pensions regulator will work with industry to develop and test a voluntary net-zero transition plan template suitable for occupational pension schemes.
Announcing the move today, it said transition plans could help organisations, including occupational pension schemes, prepare for the government’s goal of transitioning the UK to a net-zero nature-positive economy by 2050.
Last month, the government launched a consultation on how to take forward a manifesto commitment to introduce climate transition plans for financial institutions and FTSE100 companies. The government has indicated that financial institutions includes pension funds, but, as Claire Jones, partner at LCP, has said, there is little in the consultation that is specific to pension schemes.
The Pensions Regulator (TPR) said that although not currently a mandatory requirement, “transition plans have the potential to catalyse change and help shape investment decisions in the interests of savers”.
It said there was no one transition plan template designed for and tailored to occupational pension schemes, and that TPR would create one with industry’s help through a transition plan working group.
It will draw on the framework and guidance developed by the Transition Plan Taskforce, a body whose output is now owned by the group overseeing the International Sustainability Standards Board, and be presented to the Department for Work and Pensions this year.
Julian Lyne, TPR’s interim executive director of market oversight and chair of the planned working group, said: “Sustainability initiatives should improve investment governance practices and help schemes make good long-term strategic decisions.
“That is why we plan to work with industry in advance of any legislation to make sure we deliver a transition plan template made by industry for industry and that provides high standards of stewardship and helps mitigate financially material systemic risks.”
According to TPR, the ultimate template will be capable of integrating climate, nature, societal factors and adaptation in a way “that complements and supports the UK Sustainable Disclosure Requirement and associated Sustainable Reporting Standard”.
Members of the working group are to be appointed by TPR’s Lyne in due course, with membership expected to include trustees, advisers and representatives of professional bodies.
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