For asset owners with diversified portfolios climate change disclosure is not straightforward. The range of asset classes and strategies we have exposure to makes analysis of carbon risk at the aggregate level challenging, not least because there is insufficient robust and timely data but also because standardised methodologies to quantify the risk do not yet exist.
In the last couple of years new tools have become available for investors wanting to analyse the financial impact of climate change on their portfolio.
At TPT the CIO and IC are assisted in forming capital market and other investment views (including portfolio composition, risk management, manager selection and monitoring of investment managers) by TPT's Portfolio Construction Group. The focus of the group includes amongst many other things, climate related risks and opportunities as they relate to TPT's investments.
Where appropriate the PCG seeks to consider positive climate related investments, for example in 2017 it has made an allocation to green-field infrastructure which has a low-carbon technology focus. In October 2017, the PCG received a presentation on the carbon risk of the growth portfolio including scenario analysis and carbon footprint information (specifically for equities and corporate bonds).