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Principles for Responsible Investment maps signatory reporting against TCFD

The indicators, for next year’s reporting, are voluntary to report and voluntary to disclose

The Principles for Responsible Investment (PRI) has mapped its reporting requirements for signatories against the recommendations of the high-level Task Force on Climate-Related Financial Disclosures (TCFD).

Signatories will be able to report and disclose on 14 new indicators and six original indicators which have been updated following TCFD recommendations.

The indicators, for next year’s reporting, are voluntary to report and voluntary to disclose – though they will not be assessed by the PRI.

The PRI says pilot reporting against the new indicators will help signatories: inform climate strategy and investment practices; align with TCFD recommendations; demonstrate climate reporting gaps; and implement emerging industry best practice.

Reporting responses will be available in a climate transparency report which can be used both internally and externally, with asset owner-manager and peer exchange. The PRI will support signatories who report on the indicators by releasing guidance in January 2018.

The indicators will be included in the strategy and governance module in the pilot year; this will extend to asset class modules in 2019, where appropriate.

The PRI said the Environment Agency Pension Fund (EAPF) and Aviva Investors have already committed to pilot the new climate indicators.

Signatories will be able to describe in 500 words how their products or strategies might be affected by a low carbon transition and they will also be able to indicate (via boxes to tick) whether they consider “scenario analysis and/or modeling in which the risk profile of future ESG trends at portfolio level is calculated”.Signatories will have the opportunity to describe their resilience against future climate scenarios.

They have 500 words to describe the processes used to determine “which climate-related short, medium and long-term risks and opportunities could have a material impact on your organisation and its activities”.

And they can indicate whether they use tools such as:

  • Scenario analysis
  • Disclosure on emissions risk to clients/trustees/management/beneficiaries
  • Climate-related targets
  • Encourage internal and/or external portfolio managers to monitor emissions risk
  • Emissions risk monitoring and reporting are formalised into contracts when appointing managers
  • Weighted average carbon intensity
  • Carbon footprint (scope 1 and 2)
  • Portfolio carbon footprint
  • Total carbon emissions
  • Carbon intensity
  • Exposure to carbon-related assets
  • Other emissions metrics

Meanwhile, the Institutional Investors Group on Climate Change has urged ambition from EU parliamentarians voting on the EU Energy Package. The European Parliament’s Industry, Research and Energy (ITRE) Committee will vote on amendments to the Energy Efficiency Directive tomorrow.