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In June 2017, ShareAction announced an agreement to take over the reins of the Asset Owners Disclosure Project (AODP). Our intention was to build on the strong foundations established by 10 years of ranking the climate-related financial disclosures of the world’s largest pension funds, insurers, sovereign wealth funds and endowments.

We felt this was a key moment to take on AODP’s pioneering work with the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) published in June 2017 and many asset owners and managers announcing initiatives in relation to climate-related risks and opportunities. Measuring the progress of this work in a consistent, fair and public manner is critical for regulators, governments, clients and many in the investment industry.

Despite progress and an increasing number of institutional investors in the AODP ‘leaders’ category, we were acutely aware that many still incorporate climate-related risks into decision making as an ‘add-on’ or a public relations exercise. Under ShareAction’s management, AODP will continue to be a pioneer in putting the spotlight on investors’ management of climate-related risks and associated capital allocation decisions.

There are several principles the AODP will adhere to going forward. In a joint study ShareAction undertook with the Dutch group VBDO, these were identified as key features of successful benchmark surveys and are principles the AODP will look to follow:

  • Knowledge – the survey organisation needs to understand the selected investment market to ensure questions and topics are relevant;
  • Engagement – with a range of stakeholders in relation to the benchmark design, its scoring methodology and follow-up engagement;
  • Verification – a public and fair scoring process with verification of the results;
  • Governance – a governance structure that ensures the surveyor is independent from the survey respondents;
  • Advocacy – ensuring the benchmark is used as a tool to encourage improvement across a range of participating and non-participating organisations;
  • Trends – publishing repeated benchmark ‘editions’ that would encourage improvement and build engagement over time;
  • Collaboration – working with partners so the survey challenges but enables participants to improve.

We will be open to challenge if participants believe we are failing on these principles.

Progress so far

ShareAction took on the AODP after the publication of the 2017 global climate index. The initial activity focused on gathering feedback, undertaking engagement with participants and discussion of the results. As previously committed, participants who completed the survey received a summary of their results and comments on suggested improvement.

As part of this process, we received feedback from 32 institutional investors on the survey results and process. We also engaged with a range of quasi-governmental and non-governmental organisations and other industry bodies on the survey design and structure. This formed the basis of developing our plans for the next 12 months (outlined in the media release) and we are extremely thankful for feedback which was both critical and constructive.

Alongside planning for the next annual survey cycle, ShareAction published its first AODP investor report putting a spotlight on institutional investors’ voting patterns on key climate change resolutions in 2017.

This research highlighted that major asset management firms are becoming more comfortable about expressing, on behalf of clients, their discontent with corporate management about weak disclosures on climate-related risks. The report also highlighted an inconsistency in the way some investors had voted on similar proxy votes and that some fund managers still consistently supported management on shareholder resolutions.

We are also in the process of finalising the results to a survey of the 15 largest European banks. This survey will contrast the differences within the banking sector on dealing with climate-related risks and opportunities. The results will be published at the end of 2017.

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