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The Asset Owners Disclosure Project is an independent not-for-profit global organisation whose objective is to protect asset owners from the risks posed by climate change.

It does this by working with pension funds, insurance companies, sovereign wealth funds, foundations and universities to improve the level of disclosure and industry best practice.

We encourage these investors to redress the huge imbalance in their investments between high- and low-carbon assets, while realigning the investment chain to adopt long-term investment practices.

Key elements of the initiative are:

  • Conducting an annual survey and assessment of the world’s 1000 largest asset owners pertaining to their management of climate change risks and opportunities.
  • Publishing rankings of the world’s 1000 largest asset owners to allow members, stakeholders and industry to see which funds are better than others at managing climate risk.
  • Providing and promoting climate change best practice to drive and improve climate change management and capability of asset owners.
  • Developing consumer-facing programs to educate asset owner members or stakeholders of the financial risks associated with climate change.
  • Researching trends in climate risk, member behaviour and institutional investment.
  • Creating frameworks to encourage active ownership.

INVESTMENT + CLIMATE RISK

Currently, in excess of US$52 trillion is managed by the world’s 1000 largest pension funds and of this less than 2% is invested in low-carbon assets (DB Climate Change Advisors, January 2010).

Asset owners have a responsibility and, in many cases, a fiduciary duty to manage the long-term risks associated with climate change. It is therefore important for their stakeholders, members and the public to be able to differentiate between those asset owners who are implementing best practice and those who are not. It is this differentiation that will help create competition and improve best practice. A key part of the AODP is measuring how quickly and effectively asset owners are managing the challenge.

There are a lot of well-intentioned initiatives aimed at integrating climate change into the investment process – the Carbon Disclosure Project, Principles for Responsible Investment, Investor Network on Climate Risk, Institutional Investors Group on Climate Change – but it is critical that participants in these initiatives, and the broader investing community, convert those good intentions into material actions to manage climate change-related risks within their investment portfolios.

 

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