It is widely accepted that doing so will limit damage to ecosystems and human health and wellbeing. To achieve this, the global economy will need to undergo a complete transformation to drastically reduce emissions. This transformation of the economy is expected to create risks and opportunities for companies, and therefore for investors who finance them Investment risks and opportunities are also expected to be created by the physical effects of climate change, for example as a result of the increased frequency of extreme weather events and warmer temperatures. It is now widely believed that such factors should be considered by investors in their decision-making. This includes pension scheme trustees, who should consider how these risks might affect the assets, liabilities, and employer covenant of their schemes.
The DWP has provided recommendations for UK pension scheme trustees for integrating the Task Force on Climate-related Financial Disclosures (‘TCFD’) framework into their investment and governance processes. The Trustees of schemes with relevant assets of £5bn or more have been in scope from 1 October 2021 and must publish the Report on a publicly available website within seven months of the end of the scheme year. The BAE Systems Pension Scheme (“the Scheme”) has assets in excess of £5bn and therefore is obliged to provide a TCFD report. The deadline for the is 31 October 2022.
This report is the first annual TCFD statement by the Trustee the Scheme, covering the defined benefit (‘DB’) and defined contribution (‘DC’) Sections of the Scheme over the Scheme’s financial year ending 31 March 2022.
The Scheme is divided into two separate sections – the BAE Systems Section, and the Airbus Section. The BAE Systems and the Airbus Sections each have defined benefit (‘DB’) and defined contribution (‘DC’) members. The Governance section of the report (pages 3-8) explains how this report relates to the different membership categories of the Scheme.
The TCFD report covers how all four elements of the TCFD framework – Governance, Strategy, Risk Management and Metrics and Targets – have been applied to the Scheme. The key points for each element have been summarised in the Executive Summary under the Forms and downloads.
- A message to members from Andrew Gallagher, Chair of the Trustee Board
- The detailed Report