PRI seeks consultant for TCFD best practice study on real assets

Body also makes progress on fiduciary duty review

The Principles for Responsible Investment (PRI) is on the hunt for a consultant to help develop guidelines on applying the TCFD recommendations to real assets. 

In a request for proposals, the UN-backed body states that the study will focus on the areas of the TCFD – the climate risk disclosure framework published via the Financial Stability Board in 2017 – that are “technically difficult to implement” and which would “benefit from the industry using a common approach”.

The study will focus on establishing best practices through interviewing PRI signatories that have already “demonstrated advanced approaches” to implementing the TCFD recommendations. 

The PRI’s real asset study will cover:

  • The targets and metrics organisations are using to assess their exposure to and progress against climate-related risks;

  • Effective and ineffective approaches, methodologies and working practices for investors; 

  • Third-party tools or research that have been useful, and how they may work alongside in-house actions.

The PRI states in the RfP that the TCFD’s recommendations are “just as relevant to private markets, including real assets”  but require “a distinct approach when compared to other asset classes”. This is because real assets are often wholly- or majority-owned by a single investor, meaning the “onus of TCFD disclosure is with the investor rather than a corporate entity – they are both the compiler and user of the information”.

Prospective bidders for the study will need to show “deep technical knowledge” of the TCFD recommendations.

The study, which is expected to start in June and run to October, will eventually become a “formal technical guide” for real assets investors. 

Deadline for submissions for the contract, which is worth £22,500, is 31 May.

Staying with the PRI, in a recent post on LinkedIn, CEO Fiona Reynolds, discussed efforts to work with Generation Foundation – part of Generation Investment Management – and the UN Environment Programme Finance Initiative, to develop “a legal framework for impact”.

The project, which builds on the PRI’s Fiduciary Duty in the 21st Century work, aims to explore the extent to which investors can legally take into account the impacts of their investments. 

Will Martindale, Director of Policy and Research at the PRI, told RI that since being awarded a mandate in the summer, London-based law firm Freshfields has overseen a “fairly detailed review” of 11 markets, testing the extent to which sustainability impacts can be considered in investment decisions according to the various legal regimes that operate in those markets. 

The PRI and its partners are now in the process of reviewing that work, Martindale said, and supplementing it with a series of interviews with “senior figures” from the investment industry – including a big US passive manager – to compare the current state of play with the review’s findings. 

Freshfields’ final report is expected to be published in October. 

PRI’s Reynolds was also a signatory to a statement published today by The Investor Agenda on forging a sustainable recovery in the wake of the Coronavirus pandemic, including promoting climate resiliency.