In June 2017, ShareAction announced an agreement to take over the reins of the Asset Owners Disclosure Project (AODP). 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. During 2018, AODP aims to publish 3 sector-specific global climate indices and a best practice report. We might broaden our scope if considered necessary.
Global climate index of insurance companies
The first survey will focus on the global insurance sector. We will review the top 80 largest insurers (quoted and privately held) and assess how they are performing on integrating climate-related risks as an asset owner and insurer. The questionnaire is fully aligned to the TCFD recommendations for the sector. We are also drawing on Sustainability Accounting Standards, the US National Association of Insurance Commissioners and the UN PRI reporting framework to help develop the questions and survey structure. The questions for this survey will be distributed in November 2017. The index will be published in May 2018.
Best practice report
In the 2017 index, AODP identified 17 AAA rated asset owners and 1 AAA rated asset manager from a range of OECD countries (UK, US, Netherlands, Australia, France, Denmark, New Zealand and Sweden). We intend to survey these leaders using 1-1 interviews and the 2017 survey data to identify, highlight and describe which actions/initiatives are undertaken by the industry leaders. This report will also identify some straightforward steps other organisations can take to raise their own internal standards. It is agreed that this report will be formally launched on June 13th at the Finnish Climate Summit.
Global climate index of pension funds
This index will focus on the world’s 100 largest pension funds. It is intended that the survey questions will be distributed to participants in March 2018 with the index publication in September 2018.
Global climate index of asset managers
This index will focus on the world’s 50 largest asset managers. It is intended that the survey questions will be distributed to participants in late 2018 but a more precise timeline will be announced separately.
ShareAction has introduced 5 key changes to the AODP survey process in 2018.
Alignment with the TCFD recommendations
AODP survey structure and design have become increasingly aligned with the TFCD recommendations to provide a well-thought, sector-specific, relevant and effective tool for disclosure. There was a clear message from both institutional investors and their stakeholders that the TCFD recommendations are the key framework in the area of climate-related reporting.
Alignment with the TCFD recommendations and other sector-specific guidelines will give an important basis for the AODP surveys in 2018 and hopefully reduce the burden of climate-related corporate reporting for the participants. We recognise that many companies are still in the beginning of their journey of climate-related disclosures, and we believe that our questionnaire can serve them as a roadmap.
Our vision is of thriving economies, people and businesses in a low-carbon world, thus our mission is to use our framework as a tool for institutional investors to achieve a level of sophistication needed to effectively manage climate-related risks and capitalise on climate-related opportunities.
Recognising sectoral differences and staggering the surveys
A key recommendation we received during the consultation process was to make a sectoral split of the asset owner survey so as to recognise differences between pension funds, insurance companies, foundations, endowments and sovereign wealth funds.
Separate sectoral questionnaires can occur at regular intervals throughout the year. Such staggering not only will enable us to improve our advocacy and allow for clearer comparison within sectors, but will also allow the participants to better align their climate-related disclosures with other reporting initiatives and their own annual reporting.
Formation of an advisory group
To enable oversight, provide expert input and improve survey governance, AODP is in the process of forming an advisory group. The terms of reference for this advisory group will be made public when completed.
Improving advocacy outcomes was a key reason why ShareAction was selected to manage the survey and ongoing process. This will also include the publication of a best practice report that should help asset owners and managers to identify leading examples within the industry and introduce steps to improve ‘in-house’ performance.
Our dynamic and dedicated team
AODP is led by Pavel Kirjanas, who has been part of the AODP team since 2014, and supported by Felix Nagrawala, a research analyst. Toby Belsom (Head of Investor Research) oversees all research work undertaken by ShareAction. Toby has 20 years’ experience in the asset management industry as an equity analyst and fund manager.
The AODP team now works alongside other teams within ShareAction, who work on projects such as the Workforce Disclosure Initiative, Banking on a Low-Carbon Future and the auto-enrolment provider survey.