PLSA: three out of four pension schemes have net-zero plans
Two-thirds of pension schemes have already begun work on TCFD reports
Almost three-quarters of pension schemes (74%) have net-zero plans in place, or will do so within the next two years, according to the UK-based Pensions and Lifetime Savings Association (PLSA).
In a survey of over 90 schemes, the trade body found the majority of pension schemes are already making progress to net zero in regards to reporting.
The Pensions Regulator and Department for Work and Pensions in the UK now require larger schemes to use the Taskforce on Climate-Related Financial Disclosures (TCFD) in their reporting.
Nearly two-thirds of schemes (63%) have started working on their TCFD reports, with over half confirming they are within scope of the reporting deadline and could publish such a report in 2022.
Despite not being a mandatory requirement, over a quarter of pension schemes (28%) have gone further and already published a TCFD report.
“Many pension schemes are already assessing the impact of their investments in the context of the goals of the Paris Agreement,” said Nigel Peaple, director of policy and advocacy at the PLSA.
“Striving to improve investment practices, and robust transparency standards across the investment chain, are an essential part of ensuring schemes can act as responsible stewards on behalf of millions of UK pensions savers.”
It is important that the largest companies and asset managers meet institutional investors’ expectations, by enhancing their climate impact disclosure, as well as fully implementing their regulatory responsibilities within the TCFD regime.
Saver sentiment
The PLSA’s findings are also reflective of a change in sentiment among savers.
In May, research from campaign group Make My Money Matter found 18 million UK savers wanted their pension scheme to encourage companies to reduce carbon emissions this AGM season.
“As we enter the next phase of scheme reporting, it is important that the largest companies and asset managers meet institutional investors’ expectations, by enhancing their climate impact disclosure, as well as fully implementing their regulatory responsibilities within the TCFD regime,” added Peaple.
The PLSA’s survey also provided insights on schemes’ sentiment towards climate charge.
The majority of respondents (68%) identified climate-transition plans as their key priority as investors.
Meanwhile, over half (56%) identified these as net zero targets with 37% and 35% classifying board diversity and human rights as their priorities, respectively.
Beyond climate change, other elements of ESG investing were assigned significance by pension schemes.
Over half (51%) identified diversity and inclusion as the most important factors, with 49% responding as such for human rights. In both cases, these areas have been identified as areas of focus for the next 18 months.
