Climate change is affecting the Earth, causing extreme weather events, impacting crop production, and threatening our planet’s ecosystems. Understanding climate change and the impact it may have on the NatWest Group Pension Fund (the Fund) may help us to mitigate climate-related risks and take advantage of any opportunities from the transition to a low-carbon economy.

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The Task Force on Climate-related Financial Disclosures (TCFD) is an initiative that developed guidance for climate-risk reporting. UK regulations require pension trustees to meet climate governance requirements and publish an annual TCFD-aligned report on their pension scheme’s climate-related risks (Climate Report). Better climate reporting should lead to better informed decision making on climate-related risks. Greater transparency around climate-related risks should lead to more accountability and provide useful information to investors and beneficiaries.

This document is the second annual Climate Report for the Fund and has been prepared by NatWest Pension Trustee Limited (the Trustee) for the Fund year ending 31 December 2022.

What is TCFD?

The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to develop recommendations on the types of information that entities should disclose to support investors, lenders, and insurance underwriters in appropriately assessing and pricing risks related to climate change.

The TCFD has developed a framework to help public companies and other organisations, including pension schemes, more effectively disclose climate-related risks and opportunities through their existing reporting processes.

Executive summary

This report sets out the approach of the Trustee with regards to identifying and managing climate-related risks and opportunities in the context of the Trustee’s broader regulatory and fiduciary responsibilities to Fund members.

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The Trustee supports the requirement for mandatory climate governance and reporting (in line with TCFD recommendations) on the basis that this framework should allow the Trustee to more closely assess, monitor and mitigate climate-related risks on behalf of Fund members. This is the Trustee’s second disclosure under the framework and this report is expected to evolve over time.

This report has been prepared in accordance with the regulations set out under The Occupational Pension Schemes (Climate Change Governance and Reporting) Regulations 2021 (the Regulations) and provides a status update on how the Fund is currently taking account of each of the four elements set out in the Regulations. The four elements covered in the report are:

  • Governance: The Fund’s governance around climate-related risks and opportunities.
  • Strategy: The actual and potential impacts of climate-related risks and opportunities on the Fund’s strategy and financial planning.
  • Risk Management: The processes used to identify, assess and manage climate-related risks.
  • Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities.

In preparing this report, the Trustee has been supported by its responsible investment adviser, Aon Investments Limited (Aon).

We hope you enjoy reading this report and understanding more about how we are managing climate-related risks and opportunities within the Fund.

on behalf of the Trustee of NatWest Group Pension Fund