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TPT Retirement Solutions

PRI reporting framework 2019

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation undertakes scenario analysis and/or modelling and provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe Strategy affected - DB Growth Assets Portfolio Changes to strategy - Reduce equities, increase allocation to illiquid alternatives, in particular infrastructure funds supporting low carbon transition. Description of scenario and time-horizon: Multi-asset scenario analysis has been conducted on a 10 year time horizon.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

13.3. Additional information. [OPTIONAL]

TPT's Global Equity Portfolio has also been considered on a five-year time horizon against a two degrees scenario. 

 


SG 13 CC.

13.4 CC. Describe how the organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, the results and any future plans.

Describe

To inform our asset allocation and manager selection, alongside a range of other considerations.

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether the organisation has evaluated the impacts of climate-related risk, beyond the investment time-horizon, on the organisations investment strategy.

Please explain the rationale

Our investment horizon is typicaly up to 10 years. We feel this is sufficient to capture medium term trends that may have a material financial impact on our portfolio, whilst not being so long that unknown technological and/or regulation become the dominate factor.

13.7 CC. Indicate whether a range of climate scenarios is used.

Indicate the climate scenarios the organisation uses.
Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other

Other (1) please specify:

          Mercer TRIP
        
Other

Other (2) please specify:

          2ii scenario tool
        
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

We have classified our assets into the following two categories

1) Green assets

2) Brown assets

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

14.4. If you selected disclosure on emissions risks, list any specific climate related disclosure tools or frameworks that you used.

Mercer's climate model for TPT's entire DB Growth Assets (53% of total assets) (2016)

Two Degrees Investing Model for global equities (30% of total assets) (2017)

Carbon Footprinting (2017)  

14.5. Additional information [Optional]

Please see further information in TPT's Report on Climate Disclosure available on our website.

http://www.tpt.org.uk/docs/default-source/investments/responsible-investment/tpt-climate-change-report


SG 14 CC.

14.6 CC. Please provide further details on these key metric(s) used to assess climate related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Portfolio carbon footprint
          To understand carbon intensity of TPT's equity and corporate bond holdings, to report to beneficiaries, to fulfill our obligation of being a signatory to the Montreal Pledge
        
          tonnes of carbon/£million invested
        
          Trucost methodology has assisted TPT with its carbon footprint.
        
Exposure to carbon-related assets
          
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risks management processes for identifying, assessing, and managing climate-related risks.

Please describe

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).

14.9 CC. Indicate whether the organisation undertakes active ownership activities to encourage TCFD adoption.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

1 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

1 % of AUM

Brief description and measures of investment

TPT's infrastructure allocation includes investments in renewable energy including wind, solar and renewable supporting infrastructure. The measurement is of the % of AUM is based on the amount TPT has committed to this strategy, and forms the model portfolio weight.

Asset class invested

0.1 % of AUM

Brief description and measures of investment

TPT's infrastructure allocation includes investments in construction and operation of hospitals in Turkey.  The measurement is based on the fair value of the infrastructure investments as a porportion of our total infrastructure allocation. 

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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