Industry experts have highlighted a potential opportunity to evolve environmental, social and governance (ESG) disclosures from being highly data driven to a more narrative-based approach.

In a session at the Pensions and Lifetime Savings Association (PLSA) ESG Conference, panel members discussed the advent of climate transition plans amid the Transition Plan Taskforce’s (TPT) consultation on sector-specific guidance.

The Pensions Regulator (TPR) climate and sustainability lead, Mark Hill, said that the challenge for ESG reporting was to make sure that it does not become a tick-box exercise.

“There’s been comments made about reporting burden, and concerns that is only going to get larger, and, from our perspective, what we don’t want to see again is to go back to preparers seeing this as a compliance tick-box,” he continued.

“Similarly from a regulatory perspective. We’re involved in the conversations with individuals in the pensions industry around the challenges they face, such as climate scenario analysis; we’re very much involved in that discussion.

“We’re very much there helping shape things moving forward, and very keen to engage with trustees.”

Discussing the need for a forward-looking approach, Hill floated the notion that, with the advent of transition plans and TPT guidance consultation, there could be an opportunity to evolve disclosures to embrace transition plans by becoming less data intensive and more narrative based.

“Aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) in the structure already so it allows us to incorporate climate elements, nature elements and social elements, using it to form a look that we then measure progress against in a more streamlined fashion,” he said.

Also speaking on the panel, Railpen Sustainable Ownership Team senior investment manager, Adam Gillett, said that the notion of consolidating to be able to detail strategies and how they are being delivered, and leaning into the qualitative and narrative-based structure, was “really important”.

“That’s not, from my perspective, because the data isn’t good enough, I think it is good enough for lots of things, but data needs good explanation and narrative to go around it,” he continued.

“The challenge them becomes compatibility and it takes a lot longer to write a thoughtful narrative than putting numbers in a table, and to hold people to account on the narrative, but I think that’s the direction we need to go in.”

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