The government is getting “close to the point” of being able to consult on Taskforce for Climate-related Financial Disclosure (TCFD) requirements for the Local Government Pension Scheme (LGPS).

Speaking at the Pensions and Lifetime Savings Association (PLSA) Local Authority Conference, Ministry of Housing, Communities and Local Government (MHCLG) senior policy adviser, Oliver Watson, said: “MHCLG has been very busy preparing on this and I think we are getting close to the point where we are able to consult.”

He noted that the direction the consultation would take would be “very similar” to the Department for Work and Pensions’ (DWP) proposals for private funds.

“A core principle we will be following is that the quality of the disclose and risk management should be as high for a LGPS fund as for their private sector counterpart,” he explained.

The consultation is planned for later this year with the view to introduce the requirements from 2022/23.

“The LGPS is a globally significant investor and it is crucial that it takes positive stance towards understanding the carbon impact of that money and its own responsibilities, irrespective of any formal reporting requirements that might be proposed,” Watson continued.

“The framework we will likely be proposing is intended to give transparency to those people to whom the scheme is accountable, so that they can have greater understanding of how pension contributions are ultimately invested.

“Our ambition with the proposals is to minimise the burden expected of funds while ensuring good practice and risk management.”

The broad requirements of TCFD fall into four categories: governance, strategy, risk management, and metrics and targets, and Watson stated that there will be requirements on each of those, as well as an annual report.

“We are open to feedback in the consultation on which metrics might be the most useful for LGPS funds to report on and make decisions on,” he added.

“There is likely to be a requirement for a metric to show the fund’s total carbon output, as well as a carbon intensity output.

“We regard transparency and accountability as being absolutely key and, with that in mind, we are likely to propose a scheme-wide report, as well as individual fund reports.”

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