MPs: UK financial regulators must report on climate risks

The Environmental Audit Committee wants The Pensions Regulator, the Financial Conduct Authority and the Financial Reporting Council to have to produce reports considering the possible implications of climate change

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By Jonny Bairstow

The Environmental Audit Committee (EAC) has written a letter to the government calling for financial regulators to be required to report on climate change risks.

The Committee has urged Environment Secretary Michael Gove MP to formally require The Pensions Regulator (TPR), the Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) to produce reports considering the possible implications of climate change.

It says the FRC, which sets the UK’s Corporate Governance and Stewardship Codes, should be monitoring how companies disclose climate-related risks in their annual reports.

The MPs also argue both the TPR and the FCA should integrate climate risk management into their work given the long time-scales involved in pension saving and how these savings could be impacted in the future.

Mary Creagh MP, Chair of the EAC, said: “Financial regulators have a responsibility to understand the risks that climate change could pose to the financial stability of the UK and the institutions that they regulate.

“A young person auto-enrolled in a workplace pension today may be 45 or 50 years away from retirement. In that timescale, climate change – and society’s response to it – will have huge economic consequences for a wide range of industries and investments.”

ELN has contacted Defra for comment.