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Natalie Winterfrost Law Debenture “Beyond TCFD: why it’s important to think about sustainability in the round”
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ublishing Taskforce for ClimateRelated Financial Disclosures (TCFD) reports has been quite a learning curve over the last few years. On balance I am pleased that large schemes have been required to produce these reports, but there are pros and cons. One of the most obvious negatives is that the reporting requirements are extensive and prescriptive and making sure ‘every box is ticked’ in each year’s reporting can use up much time that might otherwise be spent furthering thinking on climate risk management and identifying opportunities. However, I think this negative has, at least to date, been outweighed by the impact it has had on pushing climate risk management up the pension scheme agenda. The compulsion to report on climate risk management has led to appropriate challenge of fund managers and changes to investment guidelines and benchmark both to manage climate risk and beyond. (Most of the boards I sit on thought about whether they should create a TCFD working group, but in the end plumped for an ESG committee.) Some things haven’t been working well with reporting. Data is a problem. We knew from the start data was going to be an issue, not least because pension funds were required to disclose data before anyone else in their investment chain was required to supply it. Reporting schemes have all created their ‘base data’ and yet it’s going to be far from perfect as a comparator for future years. Data on alternative asset classes is often missing or made up. Even though available, some consultants were very unwilling to include sovereign debt data in base data because they thought calculation methodologies might change. Methodologies in some areas have changed, making year to year comparisons apples versus pears, unless base data is subsequently revisited. I do feel though that two years on, scope 1 and 2 data (direct DC Innovation Unleashed
