Investment consultants for defined benefit pension schemes have been warned that they could face legal risks if they fail to properly integrate climate into their work for trustees.

In a new report, pressure group ClientEarth says that recent legal rulings and advice from professional bodies now make it clear that climate risk is a key consideration in pension fund investment decisions.

Co-author and ClientEarth lawyer Daniel Wiseman said: “Finally, we have a consensus that pension fund trustees have legal duties to consider and manage climate change risks.

“But we still see a gap in the advice they are getting from highly influential advisers, such as scheme actuaries and investment consultants. This is delaying effective action and proper risk management across the sector.

“Climate risk is present throughout the investment chain and so too is the responsibility to monitor and manage it.

“We hope that greater awareness of these legal duties will help protect professional advisers, trustees and the schemes they serve, from loss and liability arising from climate change risk.”

ClientEarth says that recent advice from the Pensions Regulator and the Institute and Faculty of Actuaries have placed a heavy emphasis on understanding  climate risk and the role it plays in investment advice.

The report said: “Investment consultants will generally have clear legal duties to understand their trustee clients’ legal duties, including in relation to climate risk, and to take this into account in their own advice where it is relevant.

“This will likely require careful consideration of climate risk implications for all investment-related decisions on which investment consultants advise.”