On the go: Private markets managers “seem generally unprepared to support clients” with the data they need to meet their Task Force on Climate-related Financial Disclosures requirements, Hymans Robertson has said.
TCFD rules came into force in April 2022, when it was made compulsory for some of the largest UK-registered companies and financial institutions to disclose climate-related financial information.
Hymans Robertson assessed the level of data that managers used by its clients were able to provide on their funds across private debt, private equity, real estate and infrastructure, approaching 59 managers and 137 funds.
Nearly half of managers (44 per cent) did not respond to the consultancy’s request. Forty-two per cent responded on all funds, while 14 per cent only provided information on some funds.
From the responses received, Hymans Robertson found that managers within real assets — such as property and infrastructure — “were generally better prepared than private investors in corporate assets”, through equity and debt mandates.
The consultancy speculated that this may be due to the disparity in the size of the underlying assets and differing regulatory reporting requirements.
Managers of property and infrastructure funds were better prepared, with 44 per cent of those managing property and 48 per cent managing infrastructure providing data on carbon emissions.
Private equity and private debt managers, meanwhile, were weaker at reporting climate data, with no private debt managers in the survey offering carbon emissions data, Hymans Robertson said.
“It is understandable that data is poor. Requests such as ours remain relatively new and we expect that managers will need to develop data collection processes, needing to work with the underlying entities in portfolios to encourage measurement and facilitate reporting,” the consultancy’s report stated.
“Even then, we expect that progress may be slow.”
Hymans Robertson urged asset managers to work with trustees on the matter. It told asset owners to adopt a data quality or data availability metric in their TCFD frameworks, and weigh up the use of minimum climate data reporting standards when choosing managers for private markets mandates.
Riscura head of research Faisal Rafi said: "Private markets have the big advantage because the fund managers can tie conditions for the capital they provide to the investee company whether its debt or equity.
"Investors should work with their fund managers and encourage them to demand more information from investee companies," he continued. "It is disappointing to see the lack of progress as shown by this survey and it’s clear that much more needs to be done."
In July, the £90.8bn Universities Superannuation Scheme’s TCFD report disclosed that the scheme is currently behind its new climate goals.
The report recommended a reduction of emissions between 4.7 per cent and 6.1 per cent each year, observing that the scheme has been underperforming these climate recommendations by as much as 69 per cent.
