WORKERS CAPITAL

UK

TPR: Trustees must 'address data shortcomings' in climate scenario analysis

TPR responds to a report claiming pension schemes’ climate scenarios are flawed

Holly Roach

02 August 2023• 

The Pensions Regulator (TPR) has urged trustees to “address data shortcomings” in regard to climate change, following the publication of a report that suggested pension schemes’ climate scenarios are flawed.

Last week, think tank Carbon Tracker said the retirement savings of millions of people could be at risk because pension funds continue to rely on "flawed" climate economics - warning the climate scenarios used by financial institutions, including pension schemes, may be underplaying the dangers and financial risks faced by climate change and were relying on economic research that ignored critical scientific evidence.

TPR director of regulatory policy, analysis and advice Louise Davey said the regulator "recognises and shares concerns that some climate scenarios may show impacts that seem relatively benign and appear to be at odds with established science".

And she urged trustees to "address data shortcomings and modelling limitations found in their initial rounds of scenario analysis and to seek improvements".

Davey added: "We expect data, methodology and tools to continue to evolve", urging trustees to address any shortcomings and limitations.

TPR also agreed reports such as those produced by Carbon Tracker were "a welcome contribution to a complex area that has a direct impact on savers' outcomes".