TCFD reports encouraging with room for improvement – TPR 

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The Pensions Regulator has published a review of 71 climate reports by pension schemes, saying it has found several areas for improvement but also some emerging good practice. 
Large schemes have had to produce a report about climate risks and opportunities in line with the Taskforce on Climate-related Financial Disclosures since October 2021. 
A selection of these TCFD reports have been reviewed by the regulator to share emerging good practice with schemes. It shows that almost all reports were published on time, are substantial documents showing trustee engagement with the new requirements, and some reports included helpful non-technical summaries for savers. 
“Although this is a new and emerging area for trustees, our review found a great deal of emerging good practice. However, we also identified several areas for improvement trustees should take note of,” said Louise Davey, TPR’s director of regulatory policy, analysis and advice. 
In the most serious cases, some reports missed disclosures required by statutory guidance, which are described as areas that schemes ‘must’ provide.  
“We expect to see an improvement in this area for the next round of reporting. Where we see a failure to meet these standards, we will consider whether enforcement action is necessary,” TPR said.  
The regulator acknowledged that climate reporting has been “a steep learning curve” for trustees but adds that they will need to continue to develop their knowledge and understanding of climate, ESG and wider sustainability issues, including biodiversity, as industry practice develops.   
TPR previously indicated it would be unlikely to issue penalty notices in the first tranche of reporting but has now said it will consider doing so in future. Trustees of schemes in scope who fail to publish their annual climate report can get a mandatory fine of at least £2,500. Where trustees have not complied with the regulations in preparing their report, TPR can issue a further penalty of up to £5,000 for individual trustees and up to £50,000 for corporate trustees. 
The reports reviewed by the regulator ranged in length from 10 to 85 pages, with the average being 34 pages. Of the reports analysed, 43 schemes representing around £450bn of assets and more than 18m memberships had set a formal net zero target. 
TPR said examples of trustees taking appropriate action included: 

The regulator also found some common issues, such as: 

If you’re a trustee of a scheme in scope, what might your scheme do differently in the next TCFD report? 

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