Question to the Department for Work and Pensions:

To ask His Majesty's Government whether they will update statutory guidance on climate risk management, as part of their review of climate risk reporting requirements which was due to take place in the second half of 2023 or otherwise; and in particular whether any updated guidance will take account of the report of the Institute and Faculty of Actuaries and the University of Exeter Climate Scorpion – the sting is in the tail published in March.

My Lords, we are undertaking a post-implementation review of the Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021. We aim to conclude the review this year.

We recognise that recent reports, including “Climate Scorpion-the sting is in the tail” have shown the limitations of the models currently available for scenario analysis. Therefore, we welcome work within the industry to ensure that scenario analysis models are decision useful and will look to acknowledge the issue in the review.

However, we do not believe that the Government should mandate which models should be used by Pension Schemes. It is important that modelling which takes into account of ESG is allowed to develop and evolve as data availability increases.