THE LEGAL DUTIES OF PENSION FUND TRUSTEES IN RELATION TO CLIMATE CHANGE

The document concludes that pension fund trustees are legally obliged to take climate change into account if it presents a material financial risk to the fund's performance. While trustees must generally prioritise the best financial interests of beneficiaries over moral or ethical concerns, any factor—including environmental, social, and governance (ESG) factors—that is financially material must be considered. The opinion argues that trustees who refuse to assess whether climate change is financially material may be open to legal challenge.

• Under common law, pension trustees must act in the best financial interests of the scheme members, meaning they should not consider ESG factors if such factors conflict with those financial interests.
• Trustees are not only permitted but are legally obliged to take into account any factor, including ESG factors, that gives rise to a material financial risk.
• The obligation to consider financial risks is consistent across common law, statutory provisions (such as the Pensions Act 1995), and guidance from the Pensions Regulator (tPR), which specifically identifies climate change as a potential financial risk.
• Material financial risk is not limited to short-term returns; it can include longer-term financial consequences, and the assessment of what is 'material' depends on the specific context of the scheme, such as the age profile of its membership.
• Trustees who refuse to consider whether a raised issue like climate change is financially material—perhaps by dismissing it as purely ethical or moral—may be acting improperly and could face a successful legal challenge.

APA

QC, K. B., & RICKARDS, J. (2016). THE LEGAL DUTIES OF PENSION FUND TRUSTEES IN RELATION TO CLIMATE CHANGE. ClientEarth. https://www.clientearth.org/media/oidi0kuc/the-legal-duties-of-pension-fund-trustees-qc-opinion-ext-en.pdf

Chicago

QC, KEITH BRYANT, and JAMES RICKARDS. THE LEGAL DUTIES OF PENSION FUND TRUSTEES IN RELATION TO CLIMATE CHANGE. ClientEarth, 2016. https://www.clientearth.org/media/oidi0kuc/the-legal-duties-of-pension-fund-trustees-qc-opinion-ext-en.pdf.

Wikipedia

{{cite report |last1=QC |first1=KEITH BRYANT |last2=RICKARDS |first2=JAMES |title=THE LEGAL DUTIES OF PENSION FUND TRUSTEES IN RELATION TO CLIMATE CHANGE |publisher=ClientEarth |date=25 November 2016 |url=https://www.clientearth.org/media/oidi0kuc/the-legal-duties-of-pension-fund-trustees-qc-opinion-ext-en.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{qc2016legal, author = {QC, KEITH BRYANT and RICKARDS, JAMES}, title = {{THE LEGAL DUTIES OF PENSION FUND TRUSTEES IN RELATION TO CLIMATE CHANGE}}, institution = {ClientEarth}, year = {2016}, month = nov, url = {https://www.clientearth.org/media/oidi0kuc/the-legal-duties-of-pension-fund-trustees-qc-opinion-ext-en.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }