The Pensions Regulator will launch a regulatory initiative in the spring, monitoring pension trustees’ compliance with climate as well as environmental, social and governance reporting duties, after it found examples of poor practice.  

 

The regulator will check if trustees of schemes with more than 100 members have published a statement of investment principles, which details the scheme’s investment policies, including consideration of financially material ESG and climate factors. Trustees are also obliged to publish an implementation statement showing how the principles in the SIP have been implemented. Non-compliant schemes could face a fine of up to £50,000. 

 

TPR will follow the initiative up with a review of a cross-section of SIP and IS statements in the summer and share the outcome with the pensions industry to highlight good practice, it said. 

 

It is currently reviewing the SIP and IS data provided through the 2022 defined contribution scheme return, where initial analysis has found that a number of schemes did not provide valid website addresses of the SIP and IS statements. 

 

“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,” said Nicola Parish, executive director of frontline regulation. 

 

“Trustees who fail to comply risk us taking enforcement action against them and I expect to see an improvement in compliance levels,” Parish added. 

 

Authorised schemes and those with assets of £1bn or more also need to publish an annual climate change report in line with the Taskforce on Climate-related Financial Disclosures. A statement on TCFD reports will be issued in the spring. 

 

Why are some schemes failing to comply with basic ESG reporting requirements?