Trustees of pension schemes now will now be required to calculate and report on the portfolio alignment metric - the alignment of the scheme’s assets with the Paris Agreement goal of limiting global warming to 1.5C above pre-industrial levels.

David Fairs, The Pension Regulator’s executive director of regulatory policy, analysis and advice, said: “Trustees are not being asked to take action to stop climate change, but they must be ready to protect savers’ pensions from the material financial risks it poses, and to take advantage of opportunities from a global pivot towards low carbon economies.”

The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 and the Occupational Pension Schemes (Climate Change Governance and Reporting) (Miscellaneous Provisions and Amendments) Regulations 2021 introduced new requirements for certain trustees. The regulations had a phased introduction, initially applying to trustees of authorised master trusts and of larger schemes with net relevant assets of £5bn or more from 1 October 2021.

However, from 1 October 2022, the rules now also apply to trustees of schemes with net relevant assets of £1bn or more. The Department for Work and Pensions intends to consider whether to extend these rules to smaller schemes in 2023.

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