Addressing climate risk within your investment strategy may be new, but we can help you cut through the complexity, build your understanding and implement change. We have helped a number of our clients develop and implement climate risk management policies and have created in-house tools that can help you evaluate the climate risks within your funding and investment strategies.
Our approach to consulting on climate change will help you set a clear plan to address climate risk, implement appropriate changes to your investment arrangements, and meet your TCFD governance and reporting requirements.
We help our clients develop their approach to addressing climate risk in a number of ways; building a clear governance framework and action plan that will allow you to manage your exposure to climate risk and effect change, while addressing the regulatory requirements along the way. Our advice and services focus on five steps (click on each to expand):
Developing an understanding of how climate risk may affect you, the requirements of TCFD and the net-zero framework is critical if you are to make informed decisions. We run training sessions and workshops for our clients to help build their knowledge on climate risk, understand how climate risk can impact their long-term outcomes, develop their investment beliefs, and facilitate decision-making. We tailor our training to meet different client needs.
Find out how you can develop a net zero investment strategy.
Change should be built from an understanding of your starting point. We can help our clients by undertaking a “climate footprint”, focusing on various climate related metrics, or through scenario analysis, to consider the resilience of strategies to different future climate pathways. As part of our research, we also evaluate investment managers and consider the extent to which their processes embed climate change considerations. Regardless of where you are on your journey to addressing climate risk, we can assess your current position and advise on appropriate next steps.
Understanding the baseline informs objective setting and allows us to help our clients prioritise action within their strategy. This can involve building a more granular understanding of their current strategy to ensure that action is appropriately targeted. We help our clients develop objectives that are right for them and ensure these action plans fit with their governance arrangements.
We help our clients explore the options for change that are available to them, and the actions they may take to evolve their investment strategy. We have helped clients reallocate assets to alternative equity strategies, both passive and actively managed, and explored options within infrastructure investment. We have also helped our clients develop and implement their stewardship policies so they can hold their providers accountable for their actions.
Find out more about our climate scenario stress testing services.
Monitoring progress against goals is essential and reassessment should take place on at least an annual basis. We can analyse both individual portfolios and overall strategies to consider whether the actions taken are keeping our clients on-track to achieve their targets and identify areas for further action. We also help our clients meet their TCFD reporting obligations.
The Taskforce on Climate-related Financial Disclosures (“TCFD”) requirements will allow trustees to explore how their approach could be made more resilient and manage climate-related risks and opportunities in a way that improves member security.
Our guide is a useful tool for trustees, pension committees and other decision-makers. It sets out the steps you can follow to make sure you have a robust approach to managing climate risk for your scheme, and ensure you are able to report against TCFD requirements.
You can also read our client case study to see how we worked with a large pension scheme to respond to the new requirements.
Climate change and the world’s response to it will have profound implications for pension schemes, therefore we must all make sure that funding and investment strategies are designed with climate risk in mind.
Even without the obvious professional responsibility to consider climate risk, new regulations will soon make it mandatory. There are new requirements for pension schemes to report in-line with TCFD, and these include testing the “resilience” of the funding and investment strategy in at least two climate change scenarios.