TCFD reporting 'hindered' by lack of data from private market managers

Pension schemes' ability to meet TCFD governance and reporting requirements could be hindered by private market managers failing provide clients with the climate risk information they need, research from Hymans Robertson has suggested.

The survey found that private markets managers may be failing to provide their clients with the information needed to effectively manage climate risks, revealing a “worryingly low level of engagement from some asset managers”.

In particular, the survey found that just over two-fifths (42 per cent) of managers provided data on all funds, while a further 14 per cent of managers only provided data on some of their funds.

However, nearly half of managers (44 per cent) approached did not respond, which Hymans Robertson suggested could raise concerns as to whether managers are prepared to meet expected requests for climate information.

In addition to this, the survey found that there was “significant variation” in the depth of information disclosed by respondents, with the reporting of carbon emissions data not yet commonplace.

Managers of property and infrastructure funds are better prepared, according to the research, which found that around 44 per cent provided data on carbon emissions for property and 48 per cent for infrastructure.

In contrast, private equity and private debt managers were able to report significantly less information on climate issues, while no private debt managers in the survey provided carbon emissions data.

Hymans Robertson head of responsible investment, Simon Jones, highlighted the research as evidence of "just how important stewardship is when it comes to managing obligations around climate risk".

He continued: "The need for asset owners to assess climate risks and report on carbon emissions has been well signposted which has, in turn, created an expectation that asset managers will be able to provide this data.

"Ensuring that requirements are clearly communicated, and expectations set, is therefore critical.

“The need for data will not diminish and it is incumbent on asset managers to continue to work with underlying investee entities to improve data availability.

"Where data may be challenging or uneconomic to collect, transparency is vital to provide confidence that climate risks are being properly managed. Efforts are needed to improve data provision."

Jones acknowledged that there will "not be a short quick fix", emphasising however, that all organisations nonetheless need to recognise the importance of this issue.

"We expect that asset owners will increasingly seek to differentiate managers on how they address climate risks and the use of minimum standards for climate reporting is likely to be a consideration for our clients," he added.

"Being able to show year-on-year improvements in both data quality, and the outcomes that are being represented, will build confidence that climate change is being properly addressed.”

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