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Isio response to consultation on policy, regulation and guidance

Climate and investment reporting: setting expectations and empowering savers.

The Department of Work and Pensions recently conducted a consultation to seek the views on the policy proposals on Paris alignment reporting. It is proposed that the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 are amended to require trustees subject to those regulations, to calculate and disclose a portfolio alignment metric setting out the extent to which their investments are aligned with the goal of limiting the increase in the global average temperature to 1.5 degrees Celsius above pre-industrial levels.

Isio supports the integration of a portfolio alignment metric given there has been widespread industry take up, which is in part due to the simplicity in communicating climate alignment.

The consultation also sets out proposals to expand information covered within the Statement of Investment Principles and Implementation Statement, with regards to trustees’ stewardship activities.​

 

In response to the DWP Consultation: Climate and investment reporting, Isio’s Head of ESG Research, Cadi Thomas supports the effort to sustain momentum but feels the DWP may have missed a vital piece of the puzzle.

Cadi Thomas, Head of ESG Research at Isio commented: “We are fully supportive of the DWP's latest climate consultation which signals a step-wise change in thinking for pension schemes and tracks increasingly ambitious industry momentum; calling for trustees to measure and report against efforts to limit the global average temperature increase to 1.5°C using the portfolio alignment metric. However, we note that the current focus remains on decarbonisation and transition risk. We feel greater attention on adaptation and physical risk is required, in alignment with the programme set out in the Glasgow Pact to advance the global goal on adaptation. Given this is the missing piece of the puzzle in an industry wide response to climate change, any evolutions in TCFD guidance could consider turning their attention to physical resilience.”

Climate and investment reporting: setting expectations and empowering savers

Isio in the News

Read more from Cadi Thomas, Head of ESG Research, in this latest article from Professional Pensions: Climate data demands must be proportionate, DWP told (professionalpensions.com)

Read the Isio response in this article from IPE: Qualified support for DWP portfolio alignment metric plan | News | IPE

Cadi Thomas spoke with Pensions Age about the Isio response to the consultation here: 'Piece of the puzzle missing' on climate reporting proposals - Pensions Age Magazine

Pensions Expert share further insight from Cadi Thomas and the issues surrounding the DWP consultation here: Industry suggests improvements to climate reporting requirements - ESG - Pensions Expert (pensions-expert.com)

Meet the experts

Cadi Thomas

Cadi Thomas

Head of ESG Research -  Investment Advisory

cadi.thomas@isio.com

Leah Worrall

Leah Worrall

Deputy Head of ESG Insight -  Investment Advisory

leah.worrall@isio.com