Dutch giant PGGM admits TCFD scenario analysis “ordeal” but sees shared journey with companies

Investor got third-party help but process was “incredibly hard”

Dutch pension asset management giant PGGM, acknowledging its own painful “ordeal” in undergoing a TCFD scenario analysis, says everyone in the market – including investors and companies – are in a learning process.

Scenario analysis is one of the key elements of the high-level Taskforce on Climate-related Financial Disclosures (TCFD), which issued its first status report last week.
The TCFD found no asset managers it surveyed are yet describing how their strategies might change under different climate-related scenarios – and PGGM explained some of the problems at an event in London today.
“That is really a challenge for us,’ said Hans Op ‘t Veld, Head of Responsible Investment.
“It’s incredibly hard, there’s multiple ways of doing it and it’s dependent on how you set the parameters of your scenario analysis.” Talking about PGGM’s own efforts, he said: “I’m dissatisfied with where we are now.”
He was speaking at the Bloomberg New Energy Finance Future of Energy EMEA Summit.
He continued: “We commissioned a third party provider and it become clear to us that asking the question leads to more questions. It was bit of an ordeal to go through that painful exercise.”

He called learning about scenario analysis a “shared journey” between investors and companies. He didn’t see any tension on this issue between them, saying: “We are aligned, that’s the beauty of it. There’s no black or white, or right or wrong, it’s not like that.”Speaking on the same panel was Mary Schapiro, the former Chair of the Securities and Exchange Commission (SEC), who has been a leading voice in the TCFD.

“There’s no black or white, or right or wrong, it’s not like that.”

She said the TCFD could have a role in investor-corporate engagement. It could be a “hugely positive by-product” to structure the conversation. She pointed to the number of shareholder proposals on climate change in the US that have been withdrawn recently after engagement. The TCFD could become as much as tool as shareholder proposals.

Asked about resistance from companies saying aligning with the TCFD will mean revealing their intellectual property, Schapiro said: “I don’t really buy any of that, this is a very flexible, scalable approach.” She said companies don’t have to divulge trade secrets and that smart people in companies will “figure out a way to get information to investors”.

Op ‘t Veld made the point that investors like to collaborate and the TCFD helps meet the need for information sharing. Investors preferred “one set of metrics that we can work with”.

Curtis Ravenel, Bloomberg’s Global Head of Sustainable Business and Finance and a member of the TCFD secretariat, said: “We hope you use the TCFD as a way to talk to one another about these issues.”

He said the data giant as a company is already seeing the impact of climate change, having had to physically move a data center in the wake of Hurricane Sandy.