ExxonMobil Pension Plan fined for failure to disclose climate risks

Large pension funds in the UK have been mandated to disclose their climate-related impacts and risks in line with the Taskforce for Climate-related Financial Disclosures’ (TCFD) framework since April 2022.

TPR this week announced that it had issued its first fine for non-compliance with this mandate, ordering the pension plan of fossil fuel giant ExxonMobil to pay up £5,000.

ExxonMobil Pension Plan told TPR that it had produced a TCFD-aligned report by the required deadline – but that it did not go live on its website due to an administrative error.

The report was uploaded within a week of TPR contacting the Plan’s trustees. The fine, issued earlier this year, has now been paid.

TPR has stated that it released the information on the action taken against the Plan to remind the sector about TCFD regulations and the possible penalties associated with non-compliance. As well as issuing plans with fines, TPR will name plans in its quarterly bulletin.

“Our case against the ExxonMobil Pension Plan shows we will and must act by using the mandatory fining regime set out in law,” said TPR’s executive director for frontline regulation Nicola Parish.

“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.”

TCFD background

The TCFD was formed by the Financial Sustainability Board and published its first climate risk reporting framework in 2017.

A key and unique facet of the framework is that it encourages businesses to undertake scenario analysis. This involves mapping likely risks and opportunities to the business’s value chain at a range of global warming trajectories, including those detailed in the Paris Agreement (2C and 1.5C).

The UK became the first major economy to mandate TCFD-aligned disclosures from large companies in 2022. The mandate’s scope is being expanded to smaller companies through to 2025.

Non-compliance in the UK comes with a minimum fine of £2,500 and a maximum fine of £50,000.

All G7 nations have pledged to introduce TCFD mandates this decade. Other adopters include Switzerland and New Zealand.