First custody-agnostic carbon tool is launched

CACEIS is the first custodian in the UK to launch a custody agnostic carbon metrics reporting tool that reports on carbon emissions data across more than 10,000 global companies.

The tool provides data to help pension schemes to align themselves with reporting requirements on the Task Force on Climate-Related Financial Disclosures (TFCD).

The “look through” reporting tool allows schemes to visualise the carbon footprint of their portfolio. This will assist their reporting of total CO2 emissions, alongside weighted average carbon intensity, in their investment portfolio. The report covers scope 1, scope 2 and scope 3 emissions.

Each underlying asset across both pooled funds and segregated mandates is analysed and the data aggregated into a report to help schemes meet their regulatory obligations. However, it can also be used to inform their engagement with asset managers on overall risk management, strategy and good governance.

More than half (52%) of UK schemes are heavily reliant on their asset managers for helping to set and maintain their ESG policies, according to a recently published survey into ESG by CACEIS in conjunction with the Pensions and Lifetime Savings Association.

Almost two thirds (63%) said they lack the information to translate climate change risks into their investments. With almost three quarters (74%) lacking data showing how these risks might affect their portfolio, it is not surprising that schemes rely so much on managers.

“Our new carbon reporting tool is custody agnostic, which means it’s open to any pension scheme,” said Scott Foster, product specialist at CACEIS.

“We’ve worked hard to ensure schemes of all shapes and sizes can access powerful data and reporting by simply sharing their holdings data, which is a first for a global custodian. It will give schemes a solid platform to better understand their portfolios ESG and climate risks, together with stronger sustainability alignment of ESG policies with their asset managers,” he said.

CACEIS also recently launched a complementary reporting solution based on the UN Global Compact Principles. This identifies ESG risks and breaches within an investment portfolio in areas such as human rights, labour, environment and anti-corruption, across more than 20,000 companies.

Both tools are powered by data from Sustainalytics, the largest independent provider of sustainability research ratings.