A quarter of PRI signatories carry out scenario analysis in first year of mandatory TCFD reporting

Responsible investment network releases top-line reporting stats

Only 26% of Principles of Responsible Investment (PRI) signatories in 2020 have assessed the resilience of their investments to climate risks – an exercise known as scenario analysis.

This is the first year that the PRI has made climate reporting – including on the use of scenario analysis – mandatory in its annual assessment of sustainable investing practices. Signatories were asked to report against three climate indicators based on the Taskforce on Climate-related Financial Disclosures (TCFD) reporting framework.

In France and the UK, the PRI said that 100% of asset owner signatories reported board oversight of climate change-related risks, compared to 79% of asset owners overall

For now, climate disclosures will not count toward overall assessment scores and signatories may still choose to make their reporting public or private. This year, 80% of reporting signatories opted to keep their responses confidential. 

The PRI had previously identified scenario analysis as an area in which signatories need the most support, leading the network to endorse a free-to-air scenario analysis tool from think tank 2 Degrees Investing Initiative and to develop an in-house scenario to be used as a basis for the exercise.

Analysis from the PRI on this year’s assessment concludes that “for most investors, TCFD implementation remains at an initial stage” with less than 8% of the reporting signatories identified as being in the top two categories.

Yet, some markets were singled out for praise. In France and the UK, the PRI said that 100% of asset owner signatories reported board oversight of climate change-related risks, compared to 79% of asset owners overall. The US was identified as the largest reporting market with 382 signatories, while commodities-focused Canada and Australia also made the top five.

A total of 2,097 signatories – 443 asset owners, 1654 asset managers – representing $97trn in assets reported against the climate indicators, compared to 591 investors last year. As of February, a total of 1,027 organisations were listed as official supporters of TCFD.

The network’s remaining 700 signatories are new members and will start reporting in 2021.