One year on – TCFD reporting for pension funds

A Pensions for Purpose Impact Lens report, sponsored by Redington, looking at how pension funds are using TCFD reports to inform strategy.

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... This Impact Lens research paper shares insights on how pension funds use the output from their Task Force on Climate-related Financial Disclosures (TCFD) reports, what challenges they face and which metrics they favour.


  • Pension funds gather data for their report from three main sources:
    • Low-cost solution – ask your investment manager.
    • Data integrity option – ask a data specialist (for example, Trucost or MSCI).
    • Data with interpretation – ask your investment consultant.
Insight: most funds are using their investment consultant.


Investment strategy

  • Concern from funds about using TCFD report output to influence their investment strategy because:
    • Data is still unreliable,
    • Reporting is still in its infancy – need trend data.
    • Does the fund want to green the world or the fund?

Insight: most funds are not yet using their reports to inform and drive strategy.

Carbon offsets

  • Only a minority of pension funds mentioned offsets in their reports, with only one accounting for it.
  • The credibility of carbon offsets was questioned.

Insight: most funds are not yet including carbon offsets in their TCFD reports.

Scenario analysis

  • A valuable tool but some scepticism - main use was to identify biggest risks.
  • 75% of funds interviewed referenced liabilities in their scenario analyses.
  • Questions over the validity of assumptions.

Insight: most funds see scenario analysis as useful but with a limited application at present.


Material risks

  • Several funds mentioned concerns about the materiality of risks.
  • Time spent analysing climate risk was disproportionate to mitigation efforts.

Insight: TCFD reporting fails if it becomes overly complicated.

Estimations or omissions

  • Mixed views about whether it is better to estimate or omit data.
  • Disagreement over whether to use scope 1, 2 and 3.
  • Embarking on the journey, even if imperfect, is valuable.

Insight: data quality remains a key challenge for pension funds.


  • Most schemes felt data was too inadequate to warrant independent assurance.
  • A focus on data assurance of the provider may be necessary, however.

Insight: independent assurance is needed but unsuitable today given data limitations.



  • Data lacks consistency.
  • Conflicted views on scope 3.
  • Concern over unintended results.

Insight: climate data remains a challenge for pension funds.

Science-based targets versus implied temperature rise

  • Science-based targets (SBTs) – positives
    • Focuses on the medium- and long-term outcomes.
    • Validation by climate experts reassuring.
    • Less time consuming to calculate. Climate data remains a challenge for pension funds.
  • Science-based targets (SBTs) – negatives
    • Speed of data dependent on SBTi’s resources.
    • Implied temperature rise (ITR) – positives
  • Allows for investment in opportunities as well as mitigation.
    • Engaging and accessible for members.
  • Implied temperature rise (ITR) – negatives
    • No standardisation in methodology.
    • More difficult to compare between pension funds.


  • Mixed views.
  • Some funds add a more accessible summary to the first two to three pages of their report to make it more
  • member friendly.
  • Unsure if members are downloading the report.
  • Most funds use other forms of outreach; for example, taking output from the report and sending emails to fund members.

Insight: few funds use TCFD reports to improve their member engagement.

Learn more here