ESG 2.2 TCFD entity report

1. (1)

   1Subject to ESG 2.2.5R and ESG 2.2.6R, a firm must include in its TCFD entity report climate-related financial disclosures regarding the overall assets managed or administered by the firm in relation to its TCFD in-scope business as defined under ESG 1A.1.1R2.

2. (2)

   A firm must explain, either in its TCFD entity report or in a cross-referenced TCFD product report, where its approach to a particular investment strategy, asset class or product is materially different to its overall entity level approach to governance, strategy or risk management under the TCFD Recommendations and Recommended Disclosures.

3. (3)

   A firm must briefly explain in its TCFD entity report how the firm’s strategy under the TCFD Recommendations and Recommended Disclosures has influenced the decision-making and process by which it delegates functions, selects delegates, and relies on services, strategies or products offered or employed by third parties, including delegates.

1. (1)

   1When preparing information for a TCFD entity report in a manner consistent with recommended disclosure (c) under the strategy recommendation in the TCFD Recommendations and Recommended Disclosures, a firm must explain:

   1. (a)

      its approach to climate-related scenario analysis; and

   2. (b)

      how the firm applies climate-related scenario analysis in its investment and risk decision making process.

2. (2)

   Where reasonably practicable, a firm must provide quantitative examples to demonstrate its approach to climate-related scenario analysis.

1. (1)

   1In producing its TCFD entity report and considering recommended disclosure (c) under the metrics and targets recommendation in the TCFD Recommendations and Recommended Disclosures, a firm must describe any targets it has set to manage climate-related risks and opportunities, including the KPIs it uses to measure progress against these targets, in a manner consistent with the TCFD Recommendations and Recommended Disclosures.

2. (2)

   Where a firm has not yet set such targets, it must explain why in its TCFD entity report.

1. (1)

   1If a firm is a member of a group, it may rely on climate-related financial disclosures consistent with the TCFD Recommendations and Recommended Disclosures made by its group or a member of its group when producing its TCFD entity report, but only to the extent that those group disclosures are relevant to the firm and cover the assets the firm administers or manages as part of its TCFD in-scope business.

2. (2)

   If a firm does rely on such group disclosures, it must ensure that its TCFD entity report:

   1. (a)

      includes cross-references, including hyperlinks, to any climate-related financial disclosure contained within the group or group member’s report that relate to assets managed or administered by the firm in relation to its TCFD in-scope business on which the firm is relying to meet its disclosure obligations under this section; and

   2. (b)

      sets out the rationale for relying on the disclosure made by its group or a member of its group and why the disclosure is relevant to the assets managed or administered by the firm in relation to its TCFD in-scope business.

3. (3)

   The firm must also ensure that any material deviations between its approach under the TCFD Recommendations and Recommended Disclosures and the climate-related financial disclosures contained within the group report are clearly explained, either in its TCFD entity report or in the report made by its group or a member of its group.

1. (1)

   1If a firm or a member of its group produces a document, other than its annual financial report, which includes climate-related financial disclosures consistent with the TCFD Recommendations and Recommended Disclosures in compliance with LR 9.8.6R(8) for its TCFD in-scope business, the firm may cross-refer to these disclosures in its TCFD entity report where this information is relevant to clients or a person who is an investor in an unauthorised AIF managed by a UK AIFM, including hyperlinks to where the relevant disclosures are available.

2. (2)

   Where a firm so refers, it must explain in its TCFD entity report the rationale for relying on the disclosures in the supplementary document and how such disclosures are relevant to the clients or a person who is an investor in an unauthorised AIF managed by a UK AIFM of the firm’s TCFD in-scope business.

1A firm’s TCFD entity report must include a statement, signed by a member of senior management of the firm, confirming that the disclosures in the report, including any third party or group disclosures cross-referenced in it, comply with the requirements under this chapter.