On the go: The Pensions Regulator will review schemes’ published Task Force on Climate-related Financial Disclosures reports in the coming months, it has disclosed.
In a blog post authored by David Fairs, TPR’s executive director of regulatory policy, analysis and advice, the regulator said that its reports assessment would inform the Department for Work and Pensions’ own review of TCFD regulations in late 2023.
It said this will include “a review of the effectiveness of the regulations and the range of schemes to which they should apply”.
The watchdog hopes that the review will inform trustees and advisers of smaller schemes that currently don’t fall within the scope of TCFD regulations, but who nevertheless wish to improve their handling of climate risk and opportunities.
Schemes with more than £5bn of assets have had to comply with TCFD rules since October 2021. From October this year, this scope will widen to schemes with more than £1bn in assets.
TPR does not expect to issue penalties to any trustees that are publishing as part of the first wave of TCFD reports, with the exception of those that fail to issue a report and where it is deemed that trustees have not made “a genuine effort” to comply with the rules.
Trustees that fail to report will be fined at least £2,500, while a lack of effort could lead to a discretionary fine of up to £50,000.
The regulator also set out industry expectations concerning the government’s plans for separate “sustainability disclosure requirements”.
Plans for these requirements were published in October 2021, but without significant detail.
TPR said that the industry anticipates similar expectations on schemes as TCFD reporting regarding governance, strategy, risk management, and the use of metrics and targets. It also expects a need to integrate SDR reporting with existing TCFD rules.
“While this has the potential to add further requirements on schemes in the short term, the data challenges should be reduced by the UK’s adoption of International Sustainability Standards Board standards,” Fairs wrote.
“These standards will form a core component of the SDR reporting framework and will improve data coverage and help schemes obtain high-quality, transparent, reliable and comparable reporting by companies and asset managers on climate and other sustainability matters.”
