TCFD reporting
We recognise and support the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFDs) to disclose clear, comparable and consistent information.
This is our first climate-related disclosures report. It is aligned with the Financial Stability Board TCFD recommendations and structured around the four recommended core elements of governance, strategy, risk management, and metrics and targets.
Because it is our first TCFD disclosure of climate-related risks and opportunities, we aim to be as comprehensive as possible but know that we have not yet achieved full compliance with all TCFD recommendations. We are actively pursuing projects to better understand our climate-related risks and opportunities and will improve our disclosures over time, including a more comprehensive quantitative analysis of different scenarios for our business.
Governance
Robust governance processes are at the heart of all our activities at Liberum Capital. Climate-related risks and opportunities form no exception. The overarching governance structure for climate-related risks and opportunities at Liberum is shown here.
Board oversight of climate-related risks and opportunities
The Liberum Board is ultimately responsible for the long-term success of the company and sets the company’s strategic aims. Part of the Board’s responsibilities is to enable the company to meet its strategic objectives within the Liberum risk management framework. As such, it considers climate-related risks and opportunities when reviewing and guiding strategic business decisions.
Liberum has identified climate change as a material risk and opportunity cutting across all its business activities, but in particular providing both substantial opportunities and risks for its investment banking and equity capital markets business.
Management’s role in assessing and managing climate-related risks and opportunities
The ultimate responsibility for the implementation and the operational progress of Liberum’s ESG efforts (including mitigation of climate-related risks and implementation of opportunities) lies with the CEO office.
Climate-related risks that directly affect Liberum staff and operations as well as implementation of measures to reduce greenhouse gas emissions and mitigate climate-related risks to buildings, and operations are managed by the CEO office. The CEO office is supported with advice and feedback from the Head of Sustainability within Liberum’s research team and external experts.
Strategy
Liberum takes pride in its independence and in its focus on long-term relationships with clients. As such, we aim to help our corporate clients grow their businesses in a sustainable way by tapping into long-term pools of investment and helping businesses raise growth capital. Our research offering seeks to provide institutional investors with comprehensive insights into the risks and opportunities of the companies we cover, which naturally goes beyond financial analysis and includes non-financial elements as well.
We focus our research and investment banking efforts on 13 pillars of excellence covering 12 sectors and Strategy, Accounting, and Sustainability, which houses our sustainability research team. The sustainability research team produces investment research covering important ESG topics and helps institutional investors integrate ESG topics into their investment processes. The team also advises our corporate clients on how to improve their ESG credentials and effectively communicate them to their stakeholders. Notably, the 12 sectors that we focus on in our business exclude the utilities sector. Our business operations have very limited exposure to financing activities that extract or use fossil fuels. At the same time, our alternatives business has successfully raised capital and supported businesses focussing on renewable energy creation. And in our resources business we service new energy-related businesses like fuel cell companies and providers of rare earth metals for wind turbines and electric motors.
Climate-related risks and opportunities for Liberum
Liberum considers climate risk a material risk that can have a material impact across all our operations. We have identified the following climate-related risks and opportunities for Liberum:
|
Transition risks |
Short-term |
Medium-term |
Long-term |
|
Legal and regulatory risks |
Changing regulatory demands to measure and disclose climate-related risks for both Liberum and our clients. |
The expanding requirements for non-financial disclosure in the EU (e.g. SFDR) and the introduction of a carbon border tax in the EU can have an impact on our clients, the demands our investment clients have on our corporate clients, and our research business |
A rising price of carbon emissions and an expanding coverage of emissions across industries in the UK and the EU and the potential for central banks to change the cost of capital for unsustainable vs. sustainable economic activities can have a material impact on our business |
|
Market risks |
Shifts in demand and supply for certain commodities, products or services can impact our business |
Changing investor demand for certain businesses and their products and services can affect the cost of capital and research demand for these companies and our business |
The development and growth of new financial instruments and market structures can impact our business |
|
Technology risks |
Financing technologies that become obsolete in the current economic transition can impact our business |
||
|
Reputational risks |
Being engaged in obsolete technologies or Liberum using resources inefficiently can impact how our clients and other stakeholders view Liberum |
||
|
|
|
||
|
Climate risks |
Short-term (0-3 years) |
Medium-term (3-5 years) |
Long-term (5-20 years) |
|
Market risks |
Acute climate events can temporarily disrupt the proper functioning of markets and impact our business |
Acute and chronic physical climate risks can disrupt financial markets and lead to substantial counterparty risks |
Acute and chronic physical climate risks can endanger financial stability and impact our business |
|
Acute physical climate risks (i.e. extreme weather events and their impact the economy, such as electricity outages or corporate defaults and credit losses) |
Extreme weather events can directly impact our ability to perform our operations in the usual places or reduce access to data via the internet. They can also impact our corporate clients and their ability to continue to operate normally. |
Extreme weather events can impact our business via business interruptions. They can also lead to substantial losses and even default of individual clients of Liberum |
Extreme weather events can trigger a series of severe losses and defaults amongst our clients or substantially disrupt our operations for an extended period |
|
Chronic physical climate risks (i.e. longer-term shifts in climate patterns leading to rising sea levels, chronic heat waves and droughts, water scarcity, etc.) |
Chronic physical climate risks are not considered a direct risk to our business but can lead to substantial losses amongst individual corporate clients and thus impact our business |
Chronic physical climate risks can influence the costs for energy and water in our company and lead to substantial losses or even defaults amongst individual clients of Liberum |
Chronic physical risks can influence our ability to do business from certain locations or lead to losses and defaults amongst a larger number of our clients |
|
|
|
|
|
|
Opportunities |
Short-term (0-3 years) |
Medium-term (3-5 years) |
Long-term (5-20 years) |
|
Energy transition |
The rapid growth in renewable energy generation and the development of alternative fuel sources provide opportunities for our investment banking and research business |
Our focus on small and medium sized enterprises in the UK positions us as a prime beneficiary of companies coming to market in new energy technologies such as hydrogen or carbon capture |
Our focus on small and medium sized enterprises in the UK positions us as a prime beneficiary of companies coming to market in new energy technologies that are at a very nascent state today |
|
Resource efficiency |
Reducing our carbon footprint and resource usage can enhance our reputation and reduce costs. Focusing on raising capital for businesses actively engaged in resource efficiency projects can lead to enhanced revenue growth for Liberum |
Helping our corporate clients reduce their carbon footprint, water usage and waste generation can increase their growth and create opportunities for our business |
Positioning Liberum as a leader in investment banking services for sustainable companies can enhance our long-term revenue growth |
|
Markets |
Focusing our investment banking efforts on companies with a sustainable business model helps allocate capital more efficiently and increases growth of our business |
The potential development of new forms of energy capital that can be raised for clients with a sustainable business model promotes the efficient allocation of capital and revenue growth at Liberum |
|
|
Offering |
Providing ESG advisory services to our clients creates additional revenue streams. |
The development of specific low-emissions services and/or additional services to support our clients during the transition to a more sustainable business model creates opportunities for our business |
|
Resilience of Liberum’s strategy to climate change
We are taking significant steps to develop scenario analysis capabilities to better understand and act on the implications of climate-related risks and opportunities for our business and customers. This aligns with the increased regulatory supervisory expectations on the management of climate-related risks using forward looking climate scenarios. Further updates will be provided in due course.
Risk Management
Our Sustainability research team is constantly monitoring climate-related risks and opportunities as they apply to both our clients and Liberum. As such, it is the ultimate responsibility of the Head of Sustainability to work with the COO office to alert the board of Liberum to relevant risks and provide options for the mitigation, avoidance or acceptance of these risks.
Metrics and targets
Metrics used to assess climate-related risks
In 2020, Liberum engaged in a project to measure its greenhouse gas footprint for the first time. We initially started by measuring our scope 1 and scope 2 emissions, and expanded the measurement of our carbon footprint to scope 3 in 2021.
We opted to use carbon offsets to become carbon neutral in FY 2020 and 2021 and will continue to offset emissions we cannot reduce in the future. Nevertheless, we aim to reduce our primary emissions where possible in order to rely less and less on offsets over time.
|
Indicator |
2021 |
Unit |
|
Greenhouse gas emissions |
||
|
Scope 1 emissions |
0 |
tonnes CO2e |
|
Scope 2 emissions |
207.23 |
tonnes CO2e |
|
Total scope 1 and 2 |
207.23 |
tonnes CO2e |
|
Scope 3 emissions |
116.18 |
tonnes CO2e |
|
Total scope 1, 2, and 3 |
323.41 |
tonnes CO2e |
|
Employees (FTE) |
173 |
|
|
Emissions per employee |
1.77 |
tonnes CO2e/FTE |
|
Water usage |
||
|
Water consumption |
2,262,000 |
litres |
|
Business revenues |
||
|
Recurring revenues from fossil fuel producers |
1 |
0.2% of total |
|
Recurring revenues from producers of renewable energy and producers of goods and services directly related to the production of renewable energy |
2 |
0.2% of total |
Liberum’s climate-related targets
We are currently working towards developing quantitative targets in accordance with the guidance provided by the Science –based target initiative for SMEs and will submit our targets for validation in 2022.
