Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, whether she has made an assessment of the potential implications for her policies of the Institute and Faculty of Actuaries and the University of Exeter report entitled Planetary Solvency, published on 16 January 2025; and whether she has made an assessment of the potential merits of providing guidance on how pension funds can gain more realistic assessments of climate risk.

Trustees of pension schemes in scope of the Taskforce on Climate-related Financial Disclosures (TCFD) are required to undertake scenario analysis to assess the resilience of their investment strategy against climate-related risks and opportunities. Trustees must have regard to the DWP’s statutory guidance when complying with these requirements. The Pensions Regulator has also issued guidance to trustees, which references free online resources such as the Sustainability Accounting Standards Board (SASB) climate risk map. This resource can help trustees form an initial view of the types of risks and opportunities that might be relevant and help guide their discussions with advisers.

Climate scenario analysis tools and the information and data behind them are evolving rapidly, so trustees should keep developments under review. It is sensible for trustees to update their scenario analysis if modelling techniques and capabilities change.

The government will continue to work in collaboration with regulators and welcomes progress within the industry to ensure that climate risk models support effective decision-making under the existing legislative requirements.