Liontrust Responsible Capitalism Report 2024 - Flipbook - Page 27
Climate-related risks
While over the short to medium term Liontrust does not have high exposure to climate change-related risks (compared to the exposure it has
in other areas), the Group does have exposure to different risks related to climate change. These will be outlined thoroughly in Liontrust’s
TCFD report which is included in the Liontrust Asset Management PLC Annual Report and Financial Statements. Some risks are as follows:
Key RC related risk
Steps taken to mitigate this risk
Overall success of these steps in 2022
• Reduce overall energy consumption
The Group is working towards reducing its overall
energy usage and will report on this in due
course.
FOR THE PLC
Rise in energy costs
• Source renewable energy where available
Successful – Liontrust sources as much renewable
energy from the grid as is available
Potential damage to offices from storms,
unexpected (violent) weather
Risk assessments are undertaken on all of
Liontrust’s locations. These are updated regularly.
Successful – there were no issues in 2022.
Potential costs from carbon credits, should these
be legally mandated in the UK or Luxembourg,
where the Group has offices
• Carbon credits not yet required by legislation.
N/A
Liontrust has a net zero goal and a proportion of
its AuMA is committed initially to this goal.
On the investment side, around 41%, initially, of
the Group’s AuMA has committed to net zero.
Liontrust has a tiered engagement plan on carbon
for its holdings.
FOR INVESTMENTS
Financed emissions in Liontrust funds
The Group has an engagement plan for
investments that are high emitters and which are
held in funds that have committed to the Group’s
net zero goal.
Not recognising / identifying / prioritising
as material those areas to which Liontrust
investments have high exposure and inadequate
issue management
Liontrust’s investment teams may consider, as
part of their investment processes, key risks
and opportunities faced by investments and
engage on these issues. The Group’s Responsible
Capitalism team is also in place to help
investment teams with this.
Liontrust’s investment teams may have this
consideration in place in their investment
processes. The Responsible Capitalism team
began providing additional research to several of
the investment teams in Q4 2022.
Not attaining interim or ultimate net zero targets
(NZAMi commitment)
Liontrust’s net zero interim targets are for 2025
and 2030.
In 2022, the Group put plans in place to help
achieve 2025 and 2030 interim targets. These
will be monitored going forward. The Responsible
Capitalism team will report to the ManCos,
the Group’s Board, and externally on progress
towards these interim targets.
For the upcoming reporting year, Liontrust will
provide more robust information on its approach
to carbon and achieving net zero. During 2022,
the Group undertook a number of steps that has
made its net zero commitment more structured
and attainable.
For its submission covering the year 2021,
Liontrust received a “D” from CDP (formerly, the
Carbon Disclosure Project) for its carbon efforts.
This represented a downgrade from its previous
“C” score.
• Reputational risk linked to this
• Performance risk linked to this
BOTH THE PLC AND INVESTMENTS
Risks of not reporting correctly or in achieving
a poor rating from a third party regarding
Liontrust’s climate-related efforts
Integrating climate risk into Group risk frameworks
Liontrust’s prudential risk statement regarding climate-related risks
states that the Group continues to work on integrating climate risk
into Group-risk frameworks. It has introduced various scenarios
Liontrust has many of its key metrics audited to
reduce the risk of incorrect reporting.
into its annual internal capital adequacy and risk assessment
(ICARA) to simulate the impact of climate change on its prudential
risk requirements and resources. To date, the Group’s climate risk
modelling does not directly undertake climate scenario testing.
Responsible Capitalism Report 2022 - 27