Metrics and targets – continued Disclosure rates Disclosure of carbon emissions by High carbon-impact In the Equities book, Materials and and data quality market value (%) sectors Energy companies also represent 2.3% 6.9% 100% a signi昀椀cant portion of the overall 22.8% 19.0% emissions. We are mitigating this by 90% 44.0% moving to our new climate-aware Getting good quality, self-reported 80% The TCFD recommendations steer equity index in the coming year. carbon data from corporates continues 17.7% investors towards paying particular to be a challenge, particularly for 70% 74.9% More generally, we see engagement attention to the sectors that have 昀椀xed income issuers that don't also 60% 63.2% a higher contribution to global as the preferred way to manage the issue public equity. Due to listing 50% carbon emissions and consider their need for decarbonisation across the requirements, listed equity markets are 49.1% 1 economy. Therefore, we continue by far the most transparent. 40% exposure to these. Guided by this, to push these sectors to transition we focused on the Utilities, Materials 30% and Energy sectors, using the Global through our engagement activities Three quarters of the carbon data for 20% Industry Classi昀椀cation Standard with equity and credit issuers, our Equities portfolio is reported by the including via Climate Action 100+ companies, based on market value. The 10% (GICS) classi昀椀cation. and other initiatives. remainder is modelled by our ESG data 0% The Utilities sector contributes the provider. Although the global and UK Per cent of portfolio disclosure by sourceEquitiesCreditUK Credit most to carbon emissions across all credit portfolios have lower reported Reported Estimated Not disclosed three portfolios, to a higher degree coverage overall, in terms of materiality, than the portfolio’s market value Taking action: Our new climate- the reporting issuers do account for in these sectors; 昀椀ve per cent, aware equity benchmark aims approximately 90 per cent of the Contribution to total carbon emissions by 39 per cent and 19 per cent of to mitigate risks in being overly associated carbon emissions. source of data the Equities, Credit and UK Credit exposed within the higher We are supportive of disclosure 100% 9.5% 6.5% portfolios respectively. impact sectors. measures that are driving more 25.4% 90% 90.5% 93.5% reporting from corporates, both 80% Contribution to overall portfolio carbon emissions by listed and unlisted. We are pleased 70% 74.6% high-impact sector to see increasing momentum from the regulatory side across many 60% 17.9% jurisdictions for TCFD adoption. Our 50% 24.5% stewardship provider communicates 40% our expectation that companies adopt 30% the full TCFD framework through 10.2% 42.1% engagement and voting. We also ask our 20% Equities 4.0% Credit fund managers to push their portfolio 10% 3.2% companies to report on material climate 0% risks, using frameworks such as the Equities Credit UK Credit 68.3% TCFD, even in private markets. Per cent of portfolio disclosure by sourceReportedEstimated 29.8% Certain information ©2020 MSCI ESG Research LLC. Reproduced by permission; no further distribution. Taking action: We are considering setting a disclosure-based target 45.1% UK for our portfolios. Credit Utilities Energy 54.2% Materials Other 0.7% Certain information ©2020 MSCI 0.0% ESG Research LLC. Reproduced by permission; no further distribution. 1 Energy, Materials and Buildings, Transportation and Agriculture, Food and Forest Products are identi昀椀ed by the TCFD as accounting for the largest proportion of GHG emissions, energy usage and water usage.