UK consults on climate requirements for Local Government Pension Scheme

LGPS authorities would need to report annually on how well their assets are aligned with the Paris climate agreement

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A consultation on the new requirements for the Local Government Pension Scheme (LGPS) to manage and report on climate-related risks has been launched.

That includes the carbon emissions related to their investments and the need to report annually on how well their assets are aligned with the Paris climate agreement.

The government’s proposals also include a requirement for LGPS authorities to calculate their carbon footprint and assess how different temperature rises could affect their assets and liabilities.

In addition, LGPS administering authorities would be required to have more effective governance, strategy, risk management and targets for the assessment and management of climate-related risks and opportunities.

The proposals seeks to improve the management of climate-related financial risk and brings LGPS in line with requirements that are already in place for private pension schemes.

The government is seeking views until 24th November 2022.

Paul Scully MP, Minister for Levelling Up said: “Managing risks and opportunities related to climate change is essential for the future of the financial sector. It will empower better decision making and ultimately help us on the road to net zero.

“The UK is a world leader in implementing the recommendations of the Taskforce for Climate-related Financial Disclosures, which are a key factor in greening the financial sector.

“I am pleased that we are proposing to extend these requirements to the Local Government Pension Scheme, which has assets in excess of £300 billion and enormous potential to have a positive climate impact.”