The Pensions Regulator (TPR) in the UK has launched a new campaign to make sure pension fund trustees are meeting their ESG and climate change reporting duties.
As part of the campaign, TPR will launch a regulatory initiative in the spring to check whether trustees are publishing important data on ESG. The regulator is contacting defined benefit (DB), defined contribution (DC) and hybrid schemes making clear it will analyse scheme return data to monitor compliance.
TPR is also checking whether trustees of schemes with more than 100 members (unless exempt) have published a statement of investment principles (SIP) which details the policies controlling how a scheme invests, including consideration of financially material ESG and climate factors.
Such pension funds must also publish an implementation statement (IS), which shows how the principles in the SIP have been implemented, TPR stated.
A review of a cross-section of SIP and IS statements will follow in the summer, with the outcome of this review to be shared with the industry to highlight good practice, it added.
TPR is warning trustees of schemes in scope that enforcement action may be taken against them if they fail to publish their SIP and/or implementation statement. The regulator has the power to impose a fine up to £50,000, where the trustee is a corporate body.
Nicola Parish, executive director of frontline regulation at TPR, said: “All savers deserve to be in well-governed schemes which protect their retirements by appropriately managing and reporting on ESG and climate related risks and opportunities.
“These reporting disclosures represent compliance with the basic requirements in relation to ESG and climate change, so it’s disappointing some trustees are failing to meet them.”
She added: “Trustees who fail to comply risk us taking enforcement action against them and I expect to see an improvement in compliance levels.”
Since 2019, TPR has requested information through scheme returns in relation to SIPs and ISs. The regulator is currently reviewing the SIP and IS data provided through the 2022 DC scheme return.
Initial analysis has highlighted a number of schemes did not provide valid website addresses of the SIP and IS statements, and TPR will be communicating with these schemes next month.
Authorised schemes and those with relevant assets of £1bn or more must also publish an annual climate change – or Task Force on Climate-related Financial Disclosures (TCFD) – report. TPR will be issuing a statement on TCFD reports in the spring.
TPR has published guidance for trustees to help them understand and meet their reporting duties.
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