The UK's Pension Protection Fund (PPF) has published its fourth Climate Change report, highlighting its progress on climate-related risks and opportunities in line with The Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Its 2023/24 TCFD report showed that 60 per cent of its portfolio companies in private markets provided carbon data in 2023, an increase from 23 per cent in 2022.

The report also revealed 90 per cent of companies on the PPF’s Climate Watchlist reported their environmental impact data to the Carbon Disclosure Project (CDP) in 2023, up from 84 per cent in 2022, indicating enhanced transparency and accountability.

Additionally, 67 per cent of PPF’s portfolio was categorised as ‘net zero, aligned, aligning or committed to align’ with the Paris Agreement, showing progress from 59 per cent since the 2020 baseline.

There has also been a 53 per cent reduction in the PPF’s offices’ scope 2 location-based emissions since the 2019/20 baseline, alongside a commitment to 100 per cent renewable electricity for offices and data centres.

The report also detailed the PPF’s engagement with managers and companies through its external manager, EOS, which sets engagement expectations and informs voting at company AGMs.

It highlighted that one third of the companies on the PPF's Climate Watchlist made progress in their engagement goals in 2023.

Since the last report, the PPF has updated its voting guidelines to integrate climate measures, including situations where it might vote against management on climate issues.

PPF head of environmental, social and governance (ESG) and sustainability, Claire Curtin, said: “It remains one of our key priorities for the business to respond to and manage risks that arise from climate change.

“To do this we need to keep pushing for better information that will help us paint a more accurate picture of emissions across the fund.

“With a sizable allocation to private markets, we have been focused on ways to improve our access to data from our private markets investments.

“Some examples include continuing to support eFront’s ESG Data Service for Private Markets and rolling out an Infrastructure transition questionnaire where we saw 100 per cent response rate from our managers.

“As a result of these efforts, we can now analyse three-quarters of the fund on carbon-related information.”

Curtin added that the PFF has set a target to reach net-zero for its operations by 2035 or sooner.

In addition to this, she explained that for its investments, it seeks to contribute to the global transition to net zero through its portfolio and engagement activities.

“In the past three years, we’ve gathered climate assessments across every investment in the Fund so we can see how the fund’s position aligns to net-zero and the Paris Agreement,” she added.

“We’ve continually evolved this to reflect new methodologies for different asset classes and changes in our portfolios.”

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