How do you select which publicly listed equities to include in your analysis?Company selection is decided in a sector-agnostic manner based on company market cap and an assessment of scope 1 & 2 emissions (disclosed or estimated). For Management Quality, this is done in association with our data partner FTSE Russell. A Carbon Performance assessment of a company will be dependent on future expansion decisions, as this is separate from Management Quality and requires careful management. Currently, there are no immediate plans for expansion in this area, though this may change in the future.
When is the Carbon Performance data on your platform expected to be updated?Please refer to the
document for further information on the complete delivery for the 2024 Carbon Performance assessment cycle.
Are the Carbon Performance assessments for oil & gas companies based on your new net zero standard?
The Carbon Performance assessments for the oil & gas companies will continue to be based on the same methodology. The introduction of the new net zero standard does not affect how Carbon Performance assessments are carried out.
If we want to request a change of industry for our company in Management Quality, how do we do this? The sector a company is placed in is derived from
FTSE’s ICB classification of the company. If the company can tell us which sector better fits the nature of the business we can look, with FTSE, at reclassifying the company to a sector which is more appropriate.
Do you have a defined a decarbonisation pathway for the consumer goods and other industrials sectors? If not, is this something you’re working on/have plans to do?
The team is currently working on a methodology which is sector agnostic and can be applied to companies outside the 11 sectors currently covered on Carbon Performance. The research is still preliminary and subject to resources and other project priorities. However, it is certainly something on our radar.
What does it mean when a company has multiple Carbon Performance assessments?Some companies operate in more than one sector assessed by TPI: we conduct a sector-specific assessment for each of the sectors in which a company operates. For example, a company may produce both crude steel and aluminium. In this company’s steel assessment, TPI would evaluate only the emissions and production data from steelmaking and compare the company's steel-specific pathway to TPI's steel-specific benchmarks. Other activities undertaken by this company, for example aluminium production, would be assessed separately considering only the emissions and production data from those separate activities. Targets adopted by the company that are specific to a particular activity are incorporated into TPI's appropriate sector-specific assessment. We take a case by case approach to the interpretation of company-wide targets to evaluate whether targets can reasonably be assumed to apply in proportion to the emissions of the activity under consideration. Investors may want to consider all sector-specific assessments of a given company to understand its overall Carbon Performance. Multi-sector companies can be easily identified in the dropdown list or in TPI's downloadable file.
How did TPI come about?
TPI was initiated by a group of asset owners – including the Environment Agency Pension Fund and National Investing Bodies (NIBs) of the Church of England which, in its May 2015 Climate Change Policy had committed to developing a tool to assess the progress of companies’ transition to the global low carbon economy. These organisations are recognised as responsible investors and regard the issue of climate change as one of the most pressing of our times – hence seeking to build their own, and support other investors’, understanding of climate change risk and opportunity.
How is TPI governed?
TPI is governed by a Steering Group which consists of representatives from asset owners who are significant sponsors of the initiative. It has two Co-Chairs: one designated by the Environment Agency and the other by the Church of England Pension Board. The Steering Group is collectively responsible for the initiative’s long-term success and can co-opt further expert and other partners to ensure the diversity of views needed to achieve the initiative’s strategic objectives. TPI’s academic, data partners and secretariat representatives are ex-officio Steering Group members. Further background can be found in the
TPI Governance Structure document.
How is TPI funded?
TPI is an asset owner led and mainly asset owner funded initiative. Strategic Asset Owner Partners provide the TPI with a significant amount of funding. A few Asset Managers and TPI´s Research Funding Partners, have also been invited by the TPI to financially support the research. Contributions to TPI during 2019 amounted to £337 000 where the vast majority, over 90% was used to finance our
research team at the LSE.
For details, see the
Financial statement for FY 2019What is TPI’s data source / material?
The data for the management quality assessment is provided by
FTSE Russell, one of the world’s leading data providers for investors. Data for the carbon performance assessment is gathered from publicly available information. Companies are given the opportunity to check the accuracy of the data before it is used in the assessment.
Does TPI require companies to increase their disclosure on transition risk?
TPI identifies gaps in data that companies should be disclosing to enable their shareholders to make informed, robust decisions about transition risk. Better disclosure is key to enabling investors to make decisions about companies’ quality of management, and is necessary for the performance assessment. Companies owe it to their investors to give them the full picture, and this tool enables that to happen.
Does TPI mandate divestment at any point?
No. TPI is a way of assessing companies’ performance against internationally agreed benchmarks. Any action asset owners wish to take is a decision for them, and not in any way mandated by TPI.
Isn’t it just the “usual suspects” involved?
Risk around the transition to the global low carbon economy is a key, mainstream investor consideration and this tool allows an objective comparison to be made between companies, enabling these to be factored into investment decisions – in whichever way an asset owner or asset manager sees fit. This clarity and objectivity have been fundamental to ensuring the initiative has been bought into, and the tool adopted, by a much wider audience than just the “usual suspects”. This is demonstrated by the breadth of organisations that have already pledged their support and are using the tool.
Do other similar measurement tools exist?
Many data providers hold information on companies’ progress on carbon reduction, however, TPI’s framework, as devised by the LSE, means the data can be used to inform engagement and bring to life in a clear and public way future individual company performance. This fills a knowledge gap for asset owners, providing a robust framework within which companies can be assessed, compared to their peers and, if appropriate, engaged with.
How does the initiative relate to other engagement efforts such as those by the IIGCC?
The TPI sits alongside other established initiatives, and we encourage the tool to be used by members of investor groups like the IIGCC to inform their ongoing conversations with companies.
Can we use the TPI logo on our webpage and in publications?
Official supporters that are listed on the TPI website are allowed to use the TPI logo in their publications and on their websites. Companies assessed by TPI are prohibited from using the logo, but are free to discuss and present their assessments. We would encourage reference to both Management Quality and Carbon Performance assessments were applicable as these analyses provide complementary information on corporate progress on climate.