Daily ESG Briefing: 71% of UK pension funds ‘unaware’ of TCFD, regulator issues warning

The latest developments in sustainable finance

The UK Pensions Regulator has warned that defined benefit (DB) schemes in the country are “not as prepared as they should be” for incoming regulations on TCFD reporting. The results of the regulator’s annual survey of DB schemes found that only half had allocated time or resources to assessing climate-related risks and opportunities, and only a fifth included climate-related risks in their risk register. 71% were unaware of the work of the TCFD, and only 8% were disclosing against it. Today, the regulator launched two consultations on its guidance for trustees on the new TCFD regulations and proposed penalties for breaching it. Under the proposed penalties, individual trustees could be fined up to £5,000 for failure to comply, rising to £50,000 for corporate breaches.

The Monetary Authority of Singapore has awarded a $1.8bn climate mandate to five asset managers, according to Citywire Asia. BlackRock, BNP Paribas Asset Management, NN Investment Partners, Robeco and Schroders have all landed contracts to run money, says the publication, citing sources. 

Schroders has invested in UK-based data house Natural Capital Research in a deal alongside Oxford Sciences Innovation. NRC was founded in 2018 to measure the world’s natural capital assets using information on landholdings. Schroders has been a client of the firm, along with utilities, landowners and other corporates, it said. The investment, for an undisclosed sum, will help NCR develop its online platform, AI and spatial analysis, with a view to it becoming “an essential tool for asset owners, asset managers and providers of capital”.

Dedicated ESG investor Parnassus Investments is reportedly being acquired by mainstream holding company Affiliated Managers Group for $600m. The San Francisco-based responsible investment house was set up in 1984. 

Norwegian pension giant KLP has added 16 companies to its exclusions list, including Alstom and Motorola, over their alleged involvement with Israeli settlements in the West Bank. KLP completed a NOK275m (€27m) divestment of its shares in the companies in June, and has also sold out of bonds from Motorola and Alstom. The fund, which exited Adani two weeks ago over its links to Myanmar, told Reuters that there “is an unacceptable risk that the excluded companies are contributing to the abuse of human rights in situations of war and conflict through their links with the Israeli settlements in the occupied West Bank”.

Only 1% of global bank credit ratings are affected by environmental issues, with 3% affected by social, according to a new report from Fitch. The agency said that banks’ diversified loan and investment portfolios as well as insurance cover meant that most physical climate risk was not material to their rating. However, it noted that longer-term transition risk was not adequately captured by the three to five year horizon of Fitch credit ratings. Governance was a more significant issue, with 16% of rated banks assigned an elevated governance score at the end of Q1 2021. Fitch said this indicated that governance concerns were both credit relevant and had a negative impact on credit rating of the banks.

BlackRock voted against a climate-lobbying proposal at Delta, because the US airline already met its expectations on the topic. The proposal received 65% support, but BlackRock said that “based on the provided disclosures and review of trade association representation, we do not have any reason to believe that there are material misalignments between key climate policy positions and advocacy conducted by the organisations and Delta’s climate priorities”.