Nearly one fifth (17 per cent) of pension scheme trustees feel unprepared for the forthcoming Task Force on Climate-related Financial Disclosures (TCFD) reporting requirements, according to analysis from LCP.

Schemes with more than £1bn of assets will become subject to the new reporting requirements from 1 October 2022, following on from the introduction of the same requirements for schemes with £5bn or more in assets in October 2021.

Under the new requirements, trustees must have a system of climate governance in place by 1 October, whilst managers will be required to start identifying and collecting the right metrics ahead of the scheme end on 31 March 2023 and before the full report is submitted on 31 October 2023.

However, LCP’s survey found that just 60 per cent of trustees felt that they were on track with making the necessary preparations ahead of these looming deadlines, with just 4 per cent feeling ahead of the game.

In light of the lack of preparation, and based on its experience with the first wave of schemes, LCP has identified five key factors for trustees to consider, including planning ahead and understanding the deadlines.

Indeed, LCP suggested that there has been some misunderstanding of which deadlines apply to different areas, arguing that it is "essential" to understand as well as know how many meetings trustees have before key deadlines to progress the necessary work.

In addition to this, the consultancy recommended establishing roles and responsibilities, such as introducing a sub-committee or working group, undertaking early training for all working groups, and finding an adviser to help identify agendas and deadlines.

Trustees were also urged to get tackling metrics and data early, as LCP stressed that there needs to be a crucial period of engagement with managers upfront so that data can be provided as early on as possible.

LCP investment team partner, Dan Mikulskis, commented: “While it can be tempting to dive straight into the data, establishing the right governance structures is the most important first step in the TCFD process.

"Trustees must take a step back and ensure roles and responsibilities are clear from the outstart. Climate risks also need to be integrated into existing risk frameworks so that they can be managed and measured effectively.

“October can seem like a distant deadline but in fact, it only allows for one or two meetings to take place. To keep on track, it is important to get an advisor on board to help manage the reporting process and set interim targets to ensure deadlines are met.

"Furthermore, it is critical to understand the metrics required early on, as TCFD often acts as checklist so that can help firms understand and put the right practices in place ahead of the reporting deadline in October 2023 and beyond.”

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