The company
Phoenix Group is the UK’s largest long-term savings and retirement business, with c. 12 million customers and around £270 billion worth of investment assets. In 2020, during its Investor Day, the company’s leadership declared its intent to become a leader in sustainability, committing to their ambition of net zero by 2050.
Phoenix Group needed to improve ESG reporting to support climate disclosure, comply with regulations, assess risk and understand the environmental impact of its investment portfolio. This reporting would help the company fully integrate sustainability into its operations, take action on climate risks and make more informed investment decisions.
The challenge
Phoenix Group had several requirements in mind to help it meet its sustainability targets. The company wanted to integrate governance and risk management with TCFD (Task Force on Climate-related Financial Disclosures) to improve reporting transparency. This would support a deepening understanding of its own impact on the environment, to include both operational and investment activities.
Compliance with the Prudential Regulation Authority (PRA) SS3/19 regulation was another key requirement as well as undertaking the Bank of England’s Climate Biennial Exploratory Scenario (CBES) stress test exercise. To meet these requirements, and enable real change, Phoenix Group instructed PwC to support its transition to a more sustainable future and deliver change for both society and investors.
“Since joining Phoenix, one of my key priorities has been to set out our ESG strategic vision, striving for Phoenix to become a leader in sustainability and make a difference to our planet through achieving Net Zero by 2050. Our work with PwC has enabled us to understand our climate impacts on the business (both minimising risk and maximising opportunity), and allowed us to demonstrate to our stakeholders we are taking the topic of climate change seriously and want to do our part to achieve a low-carbon world. This engagement has provided the analysis for the Board and Executive Management to make the right financial and strategic decisions for the business, to ensure long-term sustainability for both the business and wider economy.”
Andy Briggs
Chief Executive Officer, Phoenix Group
The approach
PwC brought in subject matter experts in insurance, risk management and scenario modelling, as well as ESG specialists, to ensure the project moved forward efficiently, meeting compliance and delivering meaningful change.
We began with a gap analysis to determine the actions that Phoenix Group needed to take to fulfil TCFD reporting and SS3/19 regulatory requirements. From this analysis, we created an implementation roadmap to help move Phoenix Group’s sustainability ambitions into action, collating multiple workstreams that included risk management, a metrics review and the CBES stress test.
The TCFD reporting framework was fundamental in helping Phoenix Group benchmark its progress on climate impact and align public climate disclosures with TCFD recommendations, providing guidance on Group, entity level and product reports as per PS21/24. Through this, the company was able to identify climate risks and opportunities and improve decision making.
As Phoenix Group was one of the first insurance companies required to undertake the CBES stress test, we set up test scenarios to identify gaps and ensure that reporting met CBES requirements, giving all stakeholders confidence in their numbers. We worked closely with the senior management team at Phoenix Group to identify gaps in the company’s governance structure and ensure it met PRA requirements.
Alongside this compliance work, PwC supported upskilling initiatives across the company to educate and support both senior management and other non-executive members to understand the importance of climate risk and governance. In ensuring a shared accountability for sustainable practices, and taking its people on the journey, Phoenix Group was able to accelerate its journey and harness a culture of continuous improvement.
The impact
Phoenix Group has navigated its low-carbon transition smoothly, helping to serve the needs of its stakeholders and the wider economy. Beyond meeting the necessary compliance, the company now has a much better understanding of the climate impacts and risks around its operations and investment assets.
With our help, Phoenix Group achieved PRA SS3/19 compliance by the reporting deadline and successfully completed the CBES stress exercise. Our support in implementing climate risk reporting helped the company in creating a standout TCFD report that was praised by customer, employee and investor stakeholders, as well as by regulators.
PwC’s risk modelling expertise and Scope 3 emissions knowledge have put the company in a position to engage in informed conversations with asset managers about its investment portfolio and to make decisions that support its sustainability strategy.
Our work with Phoenix Group has garnered important recognition: the company was one of eight finalists across all UK consultancy projects in the sustainability category of the 2022 MCA Awards.
Thanks to a successful knowledge transfer, Phoenix Group now has a solid structure to identify actions to reduce climate risk on an ongoing basis.
With climate risk now much easier to measure and manage, the company has begun the process of making its business sustainable and is taking important steps on its journey to net zero.
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