NILGOSC has voluntarily reported against the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations for the third year, today publishing its report for the year ended 31 March 2023.
The Taskforce on Climate-related Financial Disclosures (TCFD) was established in 2015 to develop a reporting framework based on a set of consistent disclosure recommendations, as a means for supporters to provide transparency about their exposure to climate-related risks.
In 2017, the TCFD released its climate-related financial disclosure recommendations, and since then, the recommendations have become the foundation for many national and international climate-related disclosure requirements. Reporting against TCFD recommendations became part of the regulatory framework for Occupational Pension Schemes in the UK in 2021, and equivalent legislation for is expected for Local Government Pension Schemes in due course. As a result of the TCFD’s success, it was announced in October 2023 that the taskforce had fulfilled its remit and was disbanded.
NILGOSC became an official TCFD supporter in June 2020, and continues to support the recommendations. Full implementation of TCFD reporting framework can take many years, with learnings along the way which help reporting bodies adapt and optimise disclosures. Therefore, NILGOSC’s publication of its third report (for the year ended 31 March 2023) builds upon the context and disclosures provided in prior years, helping NILGOSC prepare ahead of forthcoming regulation.
NILGOSC’s report for the year ended 31 March 2023 is available to review at Climate-related Disclosures Report.
In 2023, NILGOSC secured the long-term provision of TCFD-aligned carbon analytics from its global custodian, Northern Trust. Working alongside the ESG team for the first time, it was possible to analyse 46% of the Fund’s holdings at financial year end (primarily composed of NILGOSC’s active and passive equity holdings). The portion of the Fund that could be measured, compared very favourably to the benchmark comparison (MSCI All Country Word Index): with the total holdings measured emitting 61% less carbon dioxide equivalents on an absolute emissions level; and reporting a 60% lower weighted average carbon intensity (WACI) than the index. Despite the good news, the figures should be understood within the wider context, that: NILGOSC is a diversified asset owner with investment over many asset classes and geographies, much of which could not be included as part of the analysis; and much of the data can only be extracted from estimated sources which can therefore make it less reliable. Despite such caveats, capabilities are evolving in real time as all parties work towards improving disclosures globally.
Adopting the recommendations is an iterative process and full implementation can take many reporting cycles. NILGOSC looks forward to working closely with Northern Trust, with the hope of benefitting from consistent data outputs which will allow for year-on-year comparison, as well as continued evolution of the ESG analytics service and increased coverage over the length of the contract. NILGOSC is pleased to have continued voluntarily reporting in line with the TCFD recommendations and will continue to use its reporting to identify gaps and areas to focus on going forward.