The Pensions Regulator increases focus on climate and ESG reporting

The Pensions Regulator (TPR) is increasing its focus on environmental social governance (ESG) and climate change reporting.

The TPR’s campaign will launch a regulatory initiative in the spring to check whether trustees are publishing important data on ESG. Emails are being sent to DB, DC and hybrid schemes making clear that the TPR is analysing scheme return data to monitor compliance.

The Pensions Regulator is 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.

They must also publish an implementation statement (IS), which shows how the principles in the SIP have been implemented. A review of a cross-section of SIP and IS statements will follow in the summer. The outcome of this review will be shared with industry to highlight good practice.

Nicola Parish, Executive Director of Frontline Regulation at The Pensions Regulator, 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.

‘Trustees who fail to comply risk us taking enforcement action against them and I expect to see an improvement in compliance levels.’

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