The Pensions Regulator (TPR) has issued its first fine against a pension scheme for failing to publish a report on trustees’ management and governance of climate-related risks and opportunities.

The ExxonMobil Pension Plan was fined £5,000 for failing to meet new Taskforce on Climate-related Financial Disclosures (TCFD) aligned regulations, which came into force in October 2021.

TPR discovered that it was unable to locate the report, which was due to be published by 31 July 2022, as part of its broader investigation into the availability of TCFD reports and environmental, social and governance (ESG) compliance.

The regulator subsequently wrote to the scheme trustee, with the report then published six days later.

In their response, the scheme trustee confirmed that while they had produced the report and the scheme administrators had uploaded it by the deadline, a faulty URL meant the report was not published on a publicly available website until 10 August.

The trustees emphasised that they had not realised the URL was not functional, assuring TPR that they took their climate reporting obligations seriously and that their non-compliance was inadvertent.

However, TPR stressed that schemes in scope of the regulations must publish their climate change report by a set deadline on a publicly available website so savers can be assured trustees are making decisions which take into account climate risks and opportunities.

Given this, TPR issued a mandatory penalty of £5,000 in May 2023, opting for an amount above the minimum because it was a corporate body and to reflect the nature of the breach.

The matter was resolved in July 2023 when the ExxonMobil Pension Plan trustees paid the penalty.

TPR has now shared a report into the action taken against the scheme as a reminder for trustees about the regulations, confirming that those schemes that fail to publish their climate change report will be publicly named.

TPR director of frontline regulation, Nicola Parish, stated: “In our role to protect savers, we take climate change requirements extremely seriously. Our case against the ExxonMobil Pension Plan shows we will and must act by using the mandatory fining regime set out in law.

“This will continue as we analyse the second phase of climate change reporting, when smaller schemes will be required to report.

“The case serves as a warning to trustees about the importance of having proper governance and oversight where third parties are carrying out tasks on their behalf.”

News of the fine was published alongside TPR's latest compliance and enforcement bulletin, which outlined how it used its powers from January to June 2023.

This revealed that the use of automatic enrolment powers has remained consistent, with 25,106 Compliance Notices compared to 28,027 in the previous period.

In addition to this, TPR issued 15,994 Unpaid Contribution Notices compared to 17,962 in the previous period, 17,178 Fixed Penalty Notices compared to 18,897 in the previous period, and 7,944 Escalating Penalty Notices (EPN) compared to 7,492 in the previous period.

TPR also published a regional breakdown of its auto-enrolment (AE) enforcement data for the first time, showing where in the UK penalty fines have been issued in the first six months of 2023.

According to the breakdown, London saw the highest number of fines in H1 2023, at 5,764, as well as the highest number of penalties since auto-enrolment was introduced, at 66,707.

Alongside the regional breakdown, the latest edition of the bulletin placed a renewed focus on those employers who have received the largest fines due to AE breaches, as TPR confirmed that it will continue to publicly name employers who have been fined as a deterrent.

TPR director of AE, Mel Charles, stated: “While the vast majority of employers are complying with their AE duties, this bulletin demonstrates the enforcement action we take, where necessary, to protect savers.

“Naming those employers who have received the largest fines we’ve issued in certain categories, including some as high as £52,500 in this period, serves as a deterrent to other employers by raising awareness of the consequences of non-compliance.

“Our ability to publish information, including data that drives our enforcement activity, such as the new regional breakdown of our enforcement data, not only ensures we are transparent but helps educate those we regulate about our decisions and actions.”

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