Source · Select Committees · Work and Pensions Committee
Recommendation 11
11
Paragraph: 44
While larger schemes are setting net zero targets, it is likely that many smaller schemes...
Recommendation
While larger schemes are setting net zero targets, it is likely that many smaller schemes will not have the resources to do this effectively without support and guidance. Ambiguity about whether net zero targets would put trustees at risk of breaching their fiduciary duty to act in the best interests of their members is also a barrier for trustees. We do not believe that the fiduciary duty itself needs to change, but schemes do need more clarity. We recommend that the Pensions Regulator should establish a working group to develop guidance for schemes looking to set net zero targets.
Paragraph Reference:
44
Government Response
Rejected
HM Government
Rejected
The Government does not agree with the Committee’s recommendation. Significant progress has been made this year in encouraging pension schemes to sign up to a net zero target, and investor groups such as the Institutional Investors Group on Climate Change (IIGCC) and UN-convened Net Zero Asset Owners Alliance (NZAOA) continue to collaborate to deliver on these commitments. The Pensions Regulator’s climate change strategy,30 published in April, also makes clear to schemes the risks of climate change to pension pots and the potential opportunities from the transition to net zero. The Pensions Regulator’s climate adaptation report,31 published in October, shows that two-fifths of DC schemes surveyed in 202032 took climate change into account when formulating investment strategies. The Pensions Regulator will look to draw on the experience of these schemes, via their usual lines of engagement and via the new TPR panels that have recently been announced,33 as they develop and adapt guidance for pension schemes on climate change.