EXAMPLE PAGE - ANNUAL REPORT - LIONTRUST - Flipbook - Sida 26
In May 2021, Liontrust signed the Montréal Carbon Pledge in which
investors commit to measure and publicly disclose the carbon footprint
of their investment portfolios on an annual basis. Liontrust will publish
the carbon emissions of portfolios against their relevant benchmark
for all equity and fixed income strategies (and will explore over the
next year how we can best capture the carbon data of our Multi-Asset
investments). This data will also reflect the percentage of the portfolio
invested in fossil fuel reserves and clean technology solution providers.
Following our analysis and work throughout the year, we are now in
a position to take the following steps in the financial year 2021/22:
• approve our refined strategy and approach towards climate risk
at Board level
• finalise the integration of climate risks into Liontrust’s investment
risk management
• continue to support the fund managers with further tools and more
training
• continue to engage with and encourage high carbon emitting
companies to prepare for the transition to a low carbon economy
across all portfolios.
We will endeavour to have the following steps fully integrated by the
end of the first quarter of 2022:
• full integration of Climate Change risk within the Group’s risk
management framework
• full integration of Climate Change risk within investment risk and
portfolio analysis
• disclose how the company is integrating climate scenarios within
investment management
• ensure all appropriate staff are trained on new policies and
processes
• target full disclosure in the 2022 PRI’s climate risk indicators and
our 2021/2022 Annual Report and Accounts.
Transitional and Physical Risks
Liontrust will continue to take into account short, medium and long-term
risks from climate change that could have a material financial impact
on the organisation. Liontrust has determined that short term should be
considered as less than three years, medium term horizons are between
three and 10 years, and long term is considered to be10 to 30 years.
We have not identified specific climate-related risks and opportunities
beyond our organisation’s investment time horizon of 30 years.
26 - Liontrust Sustainability Report 2021
The key factors that Liontrust considered in formulating these horizons
included regulation, actual changes in climate and its impact on
extreme weather. Liontrust defines a substantive financial impact as
being greater than 1% of our adjusted profits.
Transitional Risks
Current regulation: Liontrust adheres to existing regulations; the
Compliance and internal audit teams monitor our compliance as
appropriate, ensuring internal working groups are established in
a timely manner.
Climate-related risks and other developments relating to current
regulation are discussed at the ESG Regulation Working Group.
These findings are discussed at the Sustainability & Stewardship
Working Group meetings. As described earlier, the Working Group
is chaired by the CRO, and their findings/recommendations are
communicated to the Sustainability and Stewardship Committee,
which is chaired by the CEO. This ensures that any current
regulatory issues are communicated to the Board on a frequent
basis. Regulatory compliance, including consideration of both
current and emerging rules, forms part of our standard policy and
procedures for this risk area, and consequently we maintain a
legal compliance register to track current and emerging events.
Regulations are monitored by our Compliance team on an ongoing
basis, with oversight provided by our Sustainability and Stewardship
Committee. This includes considering environmental risk factors that
could impact investment decisions, adapting to proposed or new
regulatory requirements, planning for measures that can address or
mitigate them, and ensuring that the Company’s decision makers
are up to date on how these factors could impact strategic planning
in the future.