The ExxonMobil Pension Plan has received the first fine issues by the UK pensions regulator for failing to publish a report on trustees’ management and governance of climate-related risks and opportunities.
The Pensions Regulator (TPR) fined the scheme £5,000 for failing to meet new regulations, developed from the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD).
The scheme’s trustees highlighted that although the report had been produced by the deadline, it was not published due to an administrative error.
According to TPR, 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.
Climate change reports should be accessible free of charge and published by a deadline, which is within seven months of the scheme’s most recent scheme year end date.
To monitor compliance, the Regulator investigated the publication of all climate change reports, a total of 80 in the first year. After being unable to locate the Exxon Pension Plan report online, TPR contacted the scheme trustees. The report was published six days later, it was disclosed.
The matter was resolved in July 2023 when ExxonMobil paid the penalty, which was issued in May 2023.
In a detailed written response to the Regulator, the pension fund trustees assured TPR they “took their climate reporting obligations seriously and that their non-compliance was inadvertent”.
The duties are being applied in a phased approach, starting with the largest schemes. Trustees of schemes with assets of £5bn or more were the first schemes to come in scope of the requirement to publish a climate change report, TPR said.
Failure to comply with the requirement to correctly publish a climate change report on time carries a mandatory penalty, with a minimum of £2,500. The maximum penalty is £5,000 where a trustee is an individual, or £50,000 where the trustee is a corporate body.
The ExxonMobil Pension Plan has around 20,000 members and is in surplus, with market value assets of more than £7bn, which it meant that it fell into the scope of the first group of schemes to which the TCFD regulations applied.
After being unable to locate the ExxonMobil Pension Plan’s online report, which was due to be published by 31 July 2022, TPR contacted the scheme trustees.
“They confirmed to us 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 Regulator stated.
ExxonMobil Pension Plan members are now able to easily access that scheme’s climate change report on a free of charge, publicly available website.
TPR published a report into the action taken against the scheme today to remind trustees about the regulations, which came into force in October 2021 to improve pension scheme governance and reporting of climate-related risks and opportunities.
The fine comes as TPR published its latest compliance and enforcement bulletin, showing how it used its powers from January to June 2023. Schemes including Exxon, which receive a penalty for failing to publish their climate change report, will now be named in the bulletin.
Nicola Parish, TPR’s executive director for frontline regulation, said: “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.”
She added that this will continue as TPR analyses 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,” she warned.