Private market managers ‘must do better’ on climate reporting

Pension trustees must hold private market managers to account on climate data reporting, according to Hymans Robertson.

The call was made on publication of the consultancy firm’s annual research, which assesses the extent to which private market managers are able to report on climate metrics.

In its latest study, Hymans said the availabilty from private markets remained “patchy” in 2023, rendering decision-making difficult for defined benefit (DB) and defined contribution (DC) trustees, and even putting asset owners at risk of failing to meet regulatory standards in their own climate reporting.

Hymans’ research looks at reporting on climate metrics across four asset classes: private debt, private equity, real estate and infrastructure. According to the firm’s research, asset managers reported on assets totalling £93.9bn in 2023, compared to £63.9bn in 2022.

It said the most significant improvements were seen in the amount of data provided by private debt managers, but that reporting rates across other asset classes showed “no material change” over the year.

Infrastrucrure managers’ reporting fell to 67 per cent in 2023, down from 75 per cent in 2022, while rates of reply from real estate managers fell to 47 per cent, down from 60 per cent the preivous year.

“The lower response rate from managers reporting on property assets meant that there was less data provided on carbon emissions, with only two thirds (62 per cent) of property funds providing this data,” Hymans said.

The firm, which advocates for data quality objectives to be adopted by asset owners within the Task Force on Climate-related Financial Disclosures (TCFD) frameworks, urged trustees to seek the information they need for decision making, reporting and governance requirements by: Consistently requesting data; engaging with managers and assessing their internal processes for data collection; understanding data verification processes and ensuring managers can explain how reported data has been tested; adopting pragmatic approach, which means recognising some assets are harder to report on than others; and encouraging transparency, particularly relating to gaps in data.

Hymans Robertson partner and head of responsible investment, Simon Jones, said: “Reporting on climate data remains at a relatively early stage across most private market asset classes. However, for asset owners who have set climate goals, there is a need to understand the progress that is being made. Better data helps not just the reporting needs of asset owners, but it also informs their strategic decision making.”

“We recognise that change takes time and that continued engagement with asset managers is the way by which we and our clients can help improve disclosures,” Jones added.

“Although reporting should not be at all costs, we prefer managers to disclose the information they have available and the reasons why there are gaps, rather than simply say nothing.”

Share Story:

Recent Stories

DB risks
Laura Blows discusses DB risks with Aon UK head of retirement policy, Matthew Arends, and Aon UK head of investment, Maria Johannessen, in Pensions Age's latest video interview

Sustainable equity investing in emerging markets
In these highlights of the latest Pensions Age video interview, Laura Blows speaks to Premier Miton Investors fund managers, Fiona Manning and Will Scholes, about sustainable investing in equities within emerging markets

Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets
High-yield Investing
Laura Blows discusses short duration global high-yield strategies with Royal London Asset Management head of global credit, Azhar Hussain, in the latest Pensions Age podcast