UK underscores TCFD commitment

July 14, 2022

TCFD alignment is set to be mandated as the pensions minister calls for sustainable stewardship

Proper stewardship has been recognised as vital by the UK pensions and financial inclusion minister in order to unlock a ‘green deal of sustainable investment’. 

Guy Opperman, the UK’s pensions and financial inclusion minister, said via a video statement at the Sustainable Investment Festival on July 11, that the UK could become the ‘first major economy’ to mandate the recommendations set out by the Taskforce on Climate-related Financial Disclosures (TCFD). 

The video had been recorded before his resignation and re-appointment in early July. 

The current regulations in place for master trusts and schemes with more than £5bn in assets, will be rolled out to medium-sized schemes later in 2022. 

These require pension scheme trustees to take steps to identify, assess and manage climate-related risks and opportunities and report what they have done. 

Opperman said: "Everyone talks about a green deal, but I also talk about a green deal of sustainable investment that balances fiduciary duty and the risk factors that are required to be assessed but also seeks the best return.” 

According to Opperman, the next stage in the scheme will focus on stewardship, asking firms to ensure pension schemes invested in are ‘leading the world’ in sustainability. 

By instigating the TCFD mandate, the UK could press forward and become a leading nation for sustainability, and as Opperman explained, a key condition of this is to achieve through proper stewardship. 

Opperman understands the challenge of implementing these rules, explaining: "Any new regulatory change is a challenge; we all get that. And I accept that I am placing a significant number of burdens on trustees and their investment managers as we go forward.  

“But I think they are embracing it. And the idea that there is anything other than this way forward has been completely debunked." 

The UK is not the only country moving towards mandatory TCFD disclosures. 

Senior politicians in France, Canada and Japan have also declared TCFD disclosures will become mandatory for their largest companies – such reporting has already begun in Japan.