Long term (beyond 20 years)
• Over the longer term the ‘in practice’ risks associated with climate change will come to the fore. • Such risks would include the potential physical impact of climate change, such as flooding, desertification, changes in weather patterns, change in migration patterns and conflict over natural resources.
The above timeframes should be set against the future lifetime of the Scheme which is expected to pay benefits for many decades into the future.
Strategic actions undertaken to manage climate-related risks The Trustee undertakes scenario analysis (see below) to consider the potential impact of climate-related risks and opportunities on the evolution of the Scheme’s funding position, and reviews approaches to manage climate-related risks and opportunities through the investment strategy on an ongoing basis. Climate change scenario analysis During 2025, the Trustee commissioned scenario analysis, to assess the potential implications of different climate change scenarios and associated policy responses on the development of the Scheme’s funding position. The scenarios used by the Trustee when undertaking scenario analysis can be found in the Appendix to this report. The scenarios were chosen to illustrate a range of different outcomes with varying levels of physical and transitional risk, and have been updated since the previous analysis undertaken in 2022.
These included:
• Sudden disorderly transition scenarios (“delayed action” and “late and inadequate action”) • Delayed and divergent transition scenario (“fragmented world”) • “Hot house world” scenarios (“current policies” and “late and inadequate action”)
A measured orderly transition scenario is no longer considered as part of the analysis due to a lower expectation of it occurring and the limited downside risk associated with such a scenario.
Key findings from the analysis were as follows:
(i) Despite the Scheme having a strategy that is not overly exposed to assets that are expected to be subject to significant climate-related risks, the development of the funding position could still be adversely impacted under adverse future scenarios that were modelled.
(ii) The uncertainty in the impact on the Scheme’s funding position is higher for scenarios under which increased levels of warming are assumed.
(iii) The Scheme’s funding level is expected to be negatively impacted (relative to a scenario whereby climate risk that has not been priced in to the market is not explicitly considered) over all adverse climate warming scenarios considered. However, the level of impact varies across scenarios and time periods: - Over the short-term , the potential impact on funding is similar under all scenarios. Under all scenarios considered, limited or no immediate additional action is assumed to be taken to address climate change, so that future subsequent risks become priced into current market values more quickly.
UTC UK Pension Scheme | TCFD Report | 31 December 2025
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