Climate data from private market managers “remained patchy” in 2023, leaving defined contribution (DC) and defined benefit (DB) trustees vulnerable to missing both their own and regulatory standards, according to a study by Hymans Robertson.
Trustees who have set strong climate-data quality objectives need their asset managers to improve data gathering and reporting, the pensions consultancy added.
The research, which is carried out annually, assessed the extent to which private market asset managers are able to report on climate metrics across four asset classes: private debt, private equity, real estate and infrastructure.
In 2023 asset managers reported on assets totalling £93.9bn, compared with £63.9bn in 2022. The most significant improvements were seen in the amount of data provided by private debt managers.
Response rates increased to 43% from 21% in 2022 and emissions data (26%) was reported for the first time. However, reporting rates across other asset classes demonstrated no material change over the year.
The response rate for infrastructure managers fell to 67% from 75% in 2022. The rate of reply from property managers fell to 47% from 60% in 2022. The lower response rate from managers reporting on property assets meant that there was less data provided on carbon emissions, with only two thirds (62%) of property funds providing this data, the consultancy said.
Simon Jones, partner, head of responsible investment at Hymans Robertson, said: “Reporting on climate data remains at a relatively early stage across most private-market asset classes. However, for asset owners who have set climate goals, there is a need to understand the progress that is being made.”
He continued: “Better data helps not just the reporting needs of asset owners, but it also informs their strategic decision making. This is one of the reasons why we have advocated for the adoption of data-quality objectives by asset owners within the TCFD [Task Force on Climate-related Financial Disclosures] frameworks.”
Hymans Robertson recommended that DC and DB trustees must continue to request data, engage with managers, take steps to understand data verification processes, assess gaps in data reporting and encourage transparancy.
Jones added: “Our research shows that there have been some improvements in reporting, particularly within private-debt strategies, but we’ve seen little progress across other asset classes. We recognise that change takes time and that continued engagement with asset managers is the way by which we and our clients can help improve disclosures.
”Although reporting should not be at all costs, we prefer managers to disclose the information they have available and the reasons why there are gaps, rather than simply say nothing.”
Hymans Robertson’s latest survey covered 157 funds across 57 asset managers.
Looking for IPE’s latest magazine? Read the digital edition here