New reports bring to light climate liability risks facing pensions advisers

Environmental lawyers have released new research highlighting the legal risks for pension scheme advisers who fail to address climate change in their advice to clients.

ClientEarth’s “Risky Business” series launched today, with two reports aimed at investment consultants and actuaries advising defined benefit (DB) pension schemes.

The reports draw on the Pensions Regulator’s guidance this year, which clarified that DB pensions trustees should assess the materiality of climate change. They also refer to a landmark legal opinion from 2016 stating that if pension trustees find climate change to pose a material risk to the fund, they are then legally bound to manage it accordingly.

But the Risky Business reports go further, detailing for the first time how professional advisers to DB schemes should be addressing climate change and its associated risks when advising their clients.

Lead author and ClientEarth lawyer Daniel Wiseman said: “Finally, we have a consensus that pension fund trustees have legal duties to consider and manage climate change risks. But we still see a gap in the advice they are getting from highly influential advisers, such as scheme actuaries and investment consultants. This is delaying effective action and proper risk management across the sector.

“Climate risk is present throughout the investment chain and so too is the responsibility to monitor and manage it. We hope that greater awareness of these legal duties will help protect professional advisers, trustees and the schemes they serve, from loss and liability arising from climate change risk.”

Read the reports:

• Risky Business: Climate change and professional liability risks for DB investment advisers
• Risky Business: Climate change and professional liability risks for DB pensions actuaries