Part 5: Further provision relating to pension schemes Climate change risk Section 124: Climate change risk 41A Climate change risk
Subsection (1) of new section 41A enables the Secretary of State to make regulations imposing requirements on trustees or managers of occupational pension schemes, of a description to be prescribed in the regulations, with a view to securing that there is effective governance of the scheme with respect to the effects of climate change.
	Subsection (2) makes clear that the effects of climate change in relation to which requirements may be imposed include risks arising from steps taken because of climate change and opportunities relating to climate change.
	Subsection (3) lists particular types of requirements that may be imposed on trustees or managers by the regulations. For example, these may include requirements about reviewing the scheme’s exposure to risks of a description to be prescribed in regulations (subsection (3)(a)) and requirements about assessing the scheme’s assets in a manner to be prescribed in regulations (subsection (3)(b)).
	Subsection (4) makes further provision as to the requirements which may be imposed under subsection (3)(b) about assessing the assets of a scheme. It provides that regulations may, in particular, include a requirement to assess the exposure of a scheme’s assets by reference to risks of a description to be prescribed in regulations. It also makes clear that regulations may include a requirement to determine the contribution of the scheme’s assets to climate change.
	Subsection (5) provides that regulations may require trustees or managers to take into account the ways in which the climate might change and the steps that might be taken because of such changes.
	Subsection (6) enables regulations made under subsection (5) to require trustees or managers to adopt assumptions as to future events, as prescribed in the regulations. These may include assumptions about the steps that might be taken for the purpose of achieving climate change goals - including the "Paris Agreement goal" – and assumptions about achievement of the goals themselves.
	Subsection (7) requires trustees or managers to have regard to guidance prepared by the Secretary of State from time to time when complying with requirements in regulations made under section 41A.
	Subsection (8) defines the meaning of "Paris Agreement goal" by reference to Article 2(1)(a) of the Paris Agreement.