We understand that climate change represents a systemic risk to our societies and economies. We agree with the signatories to the 2015 Paris Agreement that our collective approach needs to limit climate change to within a 1.5 degree Celsius global temperature increase by the end of the 21st century. This means reaching a point where there are net zero emissions associated with human activity released into the atmosphere by 2050 at the latest, as advised by the latest scientific advice.
We found and build companies to deliver transformational treatments to patients in areas of high unmet need. As such, we indirectly bear the potential transition and physical risks to which the portfolio companies and other investments are exposed. In addition, we also benefit the most from any potential opportunities which are associated with the transition to a low-carbon economy that the portfolio companies are able to take advantage of.
We believe that our business, and the portfolio companies in which we invest, are not materially exposed to climate change and that neither the risks nor opportunities (individually or collectively) materially impact our strategy or viability, or financial results, either in the short or longer term. However, we remain convinced that it is important for everyone to contribute to addressing the challenges of climate change. We have therefore chosen to address the climate-related issues in our business within our wider sustainability framework.
Although the Company is not required to provide a TCFD disclosure as the legislation does not currently apply to it, we are voluntarily providing disclosures consistent with the recommended disclosures of the Task Force on Climate-related Financial Disclosures to illustrate our commitment to climate-related issues given their increasing importance to our stakeholders.
Governance of climate-related issues is addressed within our wider framework for governance of sustainability issues.
The Board is ultimately responsible for governance of climate-related issues. The Board approves relevant climate-related policies, oversees the implementation of the Sustainability Policy and considers, and oversees the monitoring of, risks, arising from sustainability issues.
The Sustainability Committee acts as a cross-function group to coordinate the implementation of our sustainability policies, horizon-scan for sustainability developments or changes in risks, and support and advise the business on sustainability issues, including climate-related issues. The Sustainability Committee is also responsible for coordinating reporting through the Corporate Team and onwards to the Board.
This year we undertook a climate scenario analysis with support from an external consulting firm to consider the potential impact that certain physical and transitional climate-related risks and opportunities could have on our business and portfolio companies, in a range of different climate scenarios and on a short, medium and long-term time horizon.
We identified four potential risks and one potential opportunity for evaluation by the business. We assessed the potential impact of physical risks taking account of physical locations of facilities and desktop analysis of supply chains, combined with publicly available data on vulnerability of different locations/logistics routes, and of transition risks by analysing internal data and publicly available data to look at the impact of sustainability factors on cost of capital.
Our view is that neither the risks nor opportunities (individually or collectively) materially impact our strategy or viability, or financial results, either in the short or longer term. Accordingly we do not consider there should be any impact to our financial results. However, we intend to keep the risks and opportunities under review.
Our process for managing risk around climate-related issues forms part of our wider risk management framework.
The Audit Committee has ultimate responsibility for reviewing the scope and effectiveness of internal controls and risk management systems for climate-related issues and reviews and assesses risks and associated frameworks to manage and mitigate such risks.
As noted above, during the year we carried out a risk identification process and concluded that climate-related risks have not been included as a principal risk of the business.
The Sustainability Committee takes a lead on horizon-scanning for sustainability developments or changes in risks, including climate-related issues, which inputs into the wider risk management process. The Investment Committee is responsible for considering sustainability issues in Syncona investment transactions. The Corporate Team is responsible for considering sustainability issues within Syncona’s own business and operations.
Metrics and targets
We consider metrics and targets separately for Syncona’s own business and operations and the activities of our portfolio companies.
We collect and report annually on the Scope 1 to 3 emissions arising from Syncona’s own business and operations (excluding portfolio companies). Given the type of business we operate and the steps already taken, including adoption of 100 per cent green electricity supply to our head office in London, our emissions are already relatively low, and our aspiration is to achieve a net zero impact by 2050.
At portfolio level, we expect each of our portfolio companies to report on their Scope 1 to 3 emissions and encourage them to adopt a net zero strategy. We have provided assistance to a number of our portfolio companies this year by giving them access to an environmental consultancy firm, who have helped these portfolio companies obtain relevant data to report on their Scope 1 to 3 emissions as a first step.
Our approach to TCFD
Work in 2022
Formally incorporated climate-related concerns into our existing risk management and internal controls frameworks.
Collected Scope 1, 2 and limited Scope 3 emissions data from the majority of our portfolio companies – see below for further details – to allow us to monitor and measure progress.
Plans for 2023
Set further targets and measure progress as we hope to have a fuller data set of Scope 1 to 3 emissions from our portfolio companies over the next year.
Continue to monitor climate-related risks to ensure our policies and procedures remain fit for purpose.
Intend to become a signatory to the Net Zero Asset Managers (NZAM) initiative and adopt the NZAM commitments which are available on their website.
Work with our external advisers to progress our aspiration to be net zero throughout our full value chain (including our portfolio companies) by 2050.
Work in 2022
Conducted a climate scenario analysis of our business which highlighted key climate-related risks and opportunities. This allowed us to consider how we managed such risks and opportunities.
Plans for 2023
Continue to keep climate-related risks and opportunities under review to ensure our policies and procedures remain fit for purpose.
Work in 2022
Implemented the Responsible Investment Policy to help manage climate-related risks which are inherent in our business model. Alongside this, we worked with our portfolio companies to implement key policies and principles – see pages 20-31 for further details.
As detailed above, we conducted a climate-related risk identification process through the climate scenario analysis and incorporated any material resulting climate-related concerns into our existing risk and control frameworks.
Plans for 2023
Continue to work with our portfolio companies to implement key policies and principles.
Continue to keep climate-related risks and opportunities under review through horizon-scanning primarily led by the Sustainability Committee.
Work in 2022
Provided assistance to our portfolio companies to help them obtain relevant data to allow them to report on Scope 1 to 3 emissions – see pages 20-31 for further details.
Reported on our Scope 1 to 3 emissions.
Plans for 2023
Continue to monitor portfolio company emissions data and assist our companies with their progress towards setting a net zero strategy.
Continue to consider what further sustainability and climate-related targets are appropriate and should be implemented.