2026 Taskforce for Climate-related Financial Disclosures Report
We’ve recently published our 2026 Taskforce for Climate-related Financial Disclosure (TCFD) Report. This looks at what actions we are taking to manage the risks and opportunities that climate change poses to our Scheme.
We have concluded that one of the biggest risks to our Scheme comes from real-world emissions globally causing increased global warming, which could lead to financial damage to almost all our investments.
Dame Kate Barker, Chair of the Trustee Board.
As Dame Kate Barker outlines in the Chair’s Statement of our latest TCFD Report, the impacts of climate change pose a significant financial risk to our ability to pay our members’ their pensions.
Our 2026 TCFD Report — our ninth report — summarises what we do to manage these risks so that we can continue to pay pensions far into the future. It explains why climate change matters to us and how it influences our investment analysis and decision-making, why we engage with our assets, the government and our peers on the topic and provides an update on our progress towards net zero for our investments.
Long-term investors must engage with policy makers and regulators to enable the transition
The report shows that we have met our 2025 interim target and are currently ahead of our 2030 interim target on portfolio emissions. While that progress is encouraging, we remain concerned that global emissions continue to rise. Reducing portfolio emissions alone will not address the underlying climate challenge, which is why we continue to focus on real-world decarbonisation through our stewardship and engagement activities.
We are advocates for stronger government frameworks that accelerate the climate transition and unlock clean technology innovation. Asset owners with a long-term investment horizon must work together to engage with policy makers and regulators to drive this change.
With that in mind, recently, we hosted a roundtable with eight of our UK asset owner peers. The objective was to align with like-minded investors and collectively push for stronger policy frameworks that accelerate the energy transition in the UK. We have plans to extend this collaboration beyond the UK to work with international peers and encourage them to engage with the governments in their respective countries.
Our thinking is outlined in more detail in our Views from USS article: Why bold policy and smart investment are critical for a successful energy transition.
Evolving our approach to climate scenarios
Supporting our ambitions within the portfolio is the ongoing work we are doing to evolve our approach on climate scenarios. Climate scenarios help us to test how resilient the Scheme would be under a range of plausible climate outcomes. In last year’s TCFD report, we talked about our partnership with the University of Exeter to further develop four decision-useful climate scenarios:
- Roaring 20s
- Green Phoenix
- Boom and Bust
- Meltdown
Since last year's report, we have evolved our approach to scenario analysis and embedded our climate scenarios into five broader future states:
- A New Golden Age
- The Dual Engine World
- A Multipolar Order
- Western Exceptionalism Accelerates
- The Great Unravelling
These reflect our belief that future investment outcomes will be shaped by the interaction between climate, geopolitics, AI and demographic change, rather than any single factor in isolation. We’ve also continued to develop our thinking on climate tipping points — major changes in the climate system that could have significant consequences for economies and markets but are not always captured well by traditional models.
Assessing physical risk to our investments
We have also strengthened our assessment of physical climate risks. This gives us a better understanding of how events such as flooding, wildfires and extreme heat could affect the assets we own and helps us assess the resilience of the portfolio over time.
We use these five scenarios and physical risk modelling in parts of our investment process. They help us understand risks affecting particular assets, sectors and regions, identify potential investment opportunities, and test the resilience of our investment and funding strategies. They also help us assess how climate-related developments could influence economic and market conditions, and in turn our liabilities, for example through more persistent inflation in a world with weaker climate co-operation. We cannot predict exactly how the world will evolve. What we can do is test a wide range of possible futures, understand the risks and opportunities they present, and position the Scheme accordingly.
In line with our fiduciary duty, that is ultimately what our climate work is designed to achieve: protecting the long-term retirement outcomes of our members by building a resilient portfolio, while playing our part in supporting the transition to a lower-carbon economy.