30 Mar 2023
Andrew Aston, pensions audit director at RSM UK, gives his view on the Pensions Regulator’s response to the Taskforce on Climate-Related Financial Disclosures (TCFD) published last week.
‘While there were lot of positives among the regulator’s long-awaited observations on TCFD reporting, two key comments stood out:
‘Firstly, the use of the “F” word – Fines. The Pensions Regulator acknowledges that it had previously said it would be ‘unlikely’ to issue penalty notices to trustees of schemes completing these disclosures. However, buried in this document (and no doubt missed by many) the regulator now says fines of up to £5,000 for individual trustees and £50,000 for corporate trustees are now possible where regulations have not been met.
‘Secondly, given the complexity of some of the reporting that has been seen, it was interesting that the Pensions Regulator suggested that schemes might collect member feedback on their first climate change reports, with a view to seeing how these can be made more useful to their members in future. Whilst a reasonable suggestion, I am not convinced, given the detailed reporting requirements, how well positioned scheme members are to advise on improving these documents.
‘There were lots of positives though, and it was good to see these observations recognise that:
- In most cases the documents that the trustee boards had approved were ‘substantial’
- The regulator acknowledges the time trustee boards have spent on these disclosures
- The published results ‘showed an encouraging level of trustee engagement with the new requirements.’
- ‘The feedback provided was not all about ‘areas for improvement’ either, with several examples of good practice that they had seen trustee boards follow highlighted in each area of the TCFD reporting.
‘Consistent with our discussions with trustee boards, availability of data, data quality and the coverage of data were noted to be, and continue to be, a challenge. This is especially true for the trustee boards that are entering Year two of these requirements, and will now have to tackle scope three emissions reporting, which is complex to say the least. The overarching message seems to be ‘do your best, make it member friendly, but don’t get it wrong!’ Is it just me or does this feel like “Déjà vu” from the Chair Statement regime again?’