The Trustee has decided not to undertake new scenario analysis for this year’s report and have relied on the results of the analysis undertaken in 2022. There have been no material changes to the investment approaches used since the previous analysis was undertaken, and any strategic changes have been towards a lower risk approach (including lower expected climate risk). Therefore, the Trustee has taken the view that the analysis previously undertaken remains relevant and suitable for the purposes of this y ear’s report. Resilience of the Scheme’s funding plan and the employer covenant The Trustee receives additional advice from employer covenant and actuarial advisers on the resilience of the Scheme’s funding plan, taking account of the financial strength, operating markets and business plans of its sponsoring employers and group parent. The Trustee receives information on the group parent’s resilience to climate change. Information comes from the group parent itself, including disclosures such as the parent’s own TCFD report and its voluntary reporting to the Carbon Disclosure Project (CDP). The Trustee has reviewed the group parent’s voluntary response to the CDP’s climate disclosure , as well as its TCFD report for the year ending 2023. The Trustee noted that the group parent performs its own climate scenario analysis, and the presentation of exposure and resilience to different risks. The group parent believes all risk types identified by the CDP are relevant. In addition, all risks are reported on, with only chronic physical risks reported on less regularly when compared to acute physical risks.
The Trustee noted two areas in relation to the CDP disclosure where potential development could be seen in the future:
1. The group parent cannot currently provide an estimated cost of response to acute physical risks (one of the three key risks covered within the report).
2. The group parent cannot yet provide a possible financial impact of two of the three financial opportunities linked to the transition to a sustainable aviation industry covered within the report.
Given both of the above have the potential to impact on the sponsor covenant, the Trustee will liaise with the group parent with a view to improving reporting transparency.
Overall, the Trustee is comfortable that the funding and investment strategy is suitably resilient against a range of risks, including climate-related risks.
The Trustee will review the resilience of its funding and investment strategies relative to climate risk using an updated scenario analysis exercise in 2025 prior to the production of the 31 December 2025 TCFD report.
UTC UK Pension Scheme | TCFD Report | 31 December 2024
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