LGPS TCFD consultation launches

September 9, 2022

Among proposals is that each authority calculates the carbon footprint of their assets.

A consultation has been launched on how the UK’s Local Government Pension Scheme (LGPS) can be administered in alignment with the Taskforce on Climate-related Financial Disclosures (TCFD).

The £332.7bn scheme - one of the largest in the UK - is administered by 86 local authorities.

These authorities are already required to consider ESG factors material to investments, with policies stating how these will be integrated into investment strategies.

The government is now proposing these be built on by ensuring risks and opportunities specifically arising from climate change are properly understood and effectively managed.

This will also include a requirement for transparent reporting around these.

Read Minerva's previous coverage on the LGPS:

https://www.old.manifest.co.uk/minerva-appointed-to-national-lgps-framework/

Specifically, it is being proposed each of these authorities calculate the carbon footprint of their assets to help assess the value of these and how they could be impacted by different climate change scenarios.

The consultation has been launched by the Department for Levelling Up, Housing and Communities which has focused on the LGPS due it its size and scale, and which might bring changes to asset managers and investee companies.

In its comments accompanying the consultation launches, the government added: “The government’s view is that the requirements for the LGPS should set as high a standard as for private schemes.

“We have therefore made the requirements for private schemes the starting point for our proposals but have aimed to take account of the unique features of the LGPS, including its local administration and democratic accountability through the administering authorities.”

Twelve questions are included for authorities to answer, gauging their attitudes towards these proposals and to what extent they agree with the government’s approach.

The consultation is due to close on 24 November.

TCFD-aligned disclosures were made mandatory in the UK in 2020, to come into effect by 2025.

Many of these requirements come into effect from 2023.

If passed, the additional requirements laid out in the government’s consultation will come into effect for LGPS authorities from the 2023/24 financial year.

This will involve regulations in force by April 2023 and first reports required by December 2024.