Summary disclosure against TCFD recommendations continued
Summary of disclosure
Strategy continued Impact on our businesses, strategy and financial planning Pages 13 to 14 in full TCFD report
We are dedicated to enhancing its understanding of the risks and opportunities posed by climate change We acknowledge that, if these are not appropriately managed, they may affect investment performance and lead to wider reputational risks. These risks are primarily managed through our centralised investment proposition, which is described in the Risk management section of the TCFD report. Operationally, we have a net zero by 2030 target and we continue to improve our environmental performance by minimising emissions and promoting sustainable practices. Our facilities management strategy focuses on resource efficiency, carbon reduction and eco-friendly initiatives. In addition, we are prioritising sustainable procurement and, in the first quarter of 2025, we submitted our first mandatory Energy Savings Opportunity Scheme (“ESOS”) action plan to the Environmental Agency (“EA”). The ESGAC is dedicated to driving the Group’s ESG priorities, including those related to the climate, spanning our direct business operations and investment propositions. With regards to financial planning, climate-related risks and opportunities are factored into the preparation of the Group’s Annual Report and Accounts, with finance processes and forecasts taking climate-related costs into consideration. Climate risks will be considered as part of the Group’s ICARA process in the future. We have conducted a quantitative assessment of the exposure of the Group’s discretionary portfolio to physical and transition risks under multiple climate scenarios. Our data provider, Morningstar Sustainalytics, has developed a model that enables us to estimate how the value of our Group-level discretionary portfolio could be affected by moving to a low carbon economy; the Low Carbon Transition Value-at-Risk (“LCT-VaR”) model. This tool only covers transition risks and does not include the impact from physical risks. LCT-VaR includes a range of low carbon transition scenarios selected by Morningstar and is driven by a set of assumptions across climate policy, technological change, market and demand changes and broader socioeconomic trends. Separately, Morningstar Sustainalytics provides data on our portfolio’s exposure to physical risks, expressed as a financial loss ratio rather than a value-at-risk metric. Whilst all scenario analysis results should be interpreted with caution, given the limitations associated with climate scenario models, the exercise has informed our view that an orderly scenario that entails a gradual increase in the stringency of climate policies is preferable for our investments compared to a disorderly scenario. Whilst scenario analysis does not directly constrain our investment universe or influence top-down asset allocation, it strengthens our conviction that fund managers should actively integrate climate-related risks into their investment processes. This perspective is embedded in our due diligence framework, through which we evaluate how managers are addressing these risks through both qualitative and quantitative lenses. Our approach varies by asset class and fund type, differentiating between active and passive strategies, and considers climate integration at the asset management firm and fund level. Climate risk is embedded in our risk management framework, incorporated under the ESG risk appetite category, which includes environmental (physical and transition) risks. In the year, the ERMC and Risk and Compliance Committee (“RCC”) have reviewed climate-related Key Risk Indicators (“KRIs”), which monitor the management of investment and operational climate-related risks. Potential impacts of climate-related events on the operation of the business are assessed through the Group’s Operational Resilience Programme. Risk monitoring is conducted through a third-party risk management platform, introduced in the reporting period. Assessment of climate-related risks to investments is primarily done through the integration of climate-related risks into the selection and monitoring process, for buy list assets covered by our research process (ESG integration).
Resilience based on scenarios, including a 2 o C or lower scenario Pages 14 to 17 in full TCFD report
Risk management Processes for identifying and assessing climate-related risks Pages 18 to 25 in full TCFD report
46 Brooks Macdonald Group plc Annual Report and Accounts 2025 Brooks Macdonald Group plc 46
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