On the 22 February, the Pensions Regulator (TPR) released a press release to mark the launch of a campaign to make sure trustees are meeting their ESG and climate change reporting duties. The Executive Director of Frontline Regulation at TPR, Nicola Parish, 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.”

A key part of this campaign is that TPR will be reviewing Statements of Investment Principles (SIPs) and Implementation Statements (ISs) to ensure that such documents are compliant with the legal requirements in relation to ESG factors. The campaign was prompted by TPR’s initial analysis of information submitted in the 2022 DC scheme returns, where they found that a number of schemes did not provide a website address where the SIP and IS statements could be found and/or if provided, the link did not work. TPR advises it will be communicating with these schemes next month.

Trustees should therefore check their documents to ensure that they cover the requirements and are published appropriately (on a publicly available website and that the URL is correct and works). TPR has the power to impose a fine of up to £50,000 for non-compliance (where the trustee is a corporate body).

TPR has also said it will be issuing a statement on annual climate change reports (TCFD) in the spring and we look forward to further details on this.

This press release follows TPR’s trend of placing greater weight on the climate and wider environmental factors in recent years. This was seen in the publication of its detailed guidance on the Governance and Reporting of climate-related risks and opportunities in September 2021 and their ‘Climate Change Strategy’ in April 2021 (which sets out their strategic response to climate change and how TPR can help trustees meet the challenges from climate change). In addition, the draft Single Code contains references to ESG and climate change throughout.

With expertise and experience in this area, our pensions team can help you understand your obligations in this area and provide a review of your SIP and IS.

Should you wish to consider any ESG issues further, do take a look at our interactive guide, which has been designed to help you easily navigate the law and guidance surrounding ESG.