Mandatory TCFD-aligned reporting has already achieved three key things for the industry. It has:
- Put power in the hands of investors and beneficiaries to hold asset managers and asset owners to account: The transparency brought about by the disclosure of entity and product-level reports means that investors and beneficiaries can now question and challenge their asset managers and pension and investment providers on the way they are managing the climate risks on their portfolios and potentially vote with their feet.
- Moved reporting from; “tell-me” to “show-me” evidence-based reporting: Product-level TCFD reporting has focused minds to go beyond the headlines and explain how fund managers are managing the level of climate risk within their funds. We see leaders here providing greater clarity in terms of allocation to high-impact sectors (e.g. % allocation to green bonds) in addition to greater transparency around their voting and engagement activities.
- Allowed comparability of climate data across entities and funds or portfolios: Asset owners now have greater comparability of climate data for their UK-managed investments and can engage constructively with managers on their plans for addressing climate change. More importantly, they now have a mechanism for assessing their own impact on the environment
We have supported several organizations on their TCFD journey supporting them to; to scope and mobilise their projects, manage the delivery of TCFD reporting and enhance their existing operating model. These projects have highlighted some common challenges.