The fourth AODP Global Climate 500 Index launches against a backdrop of positive change.
It is now widely acknowledged that to ignore the financial risk of climate change is a threat to investment portfolios and a growing number of investors are taking actions to understand how holding the increase in the global average temperature to well below 2°C will impact their investment portfolios.
Climate change risk is now a mainstream issue for institutional investors and last year has seen many significantly step up their action to manage this. However only a handful are protecting their portfolios from the very real danger of stranded asset1 scenarios, and it is shocking that nearly half the world’s biggest asset owners are doing nothing at all to mitigate climate risk.
Asset owners who do recognise climate risk are taking significantly more action than last year. The Leaders are widening the gap from the Laggards, but the ‘Learners’ are starting to catch up. These results are even more impressive, as the 2016 Index is more stringent, requiring evidence of tangible action and removing credit purely for transparency or commitments.
- 31 Leaders rated A and above, an increase of 29%
- 12 asset owners are rated AAA, a 33% increase
- The most significant increase is a 52% rise in asset owners rated CCC-C to 41, indicating many more are acknowledging and more importantly taking action on managing climate risk in their portfolios.
- Nearly half the index remains X rated, with no evidence they are taking any action.
Momentum is building in the industry and there are many more asset owners embarking on the journey. 51% of the index are now taking some action in managing investment climate risk, which is a positive outcome. There are clear areas for improvement that need to gather pace – investors need to take a more serious look at the potential risks of stranded assets in their portfolios and disclosure of both high and low carbon investments needs to be more transparent. A sudden change in regulation is what could see the bursting of the carbon bubble.
Climate change risk is now a mainstream issue for institutional investors and last year has seen many significantly step up their action to manage this. However, only a handful are protecting their portfolios from the very real danger of stranded assets, and it is shocking that nearly half the world’s biggest investors are doing nothing at all to mitigate climate risk. -Julian Poulter, CEO, AODP
The report, Digging Deeper: An In-depth Examination Of The 2015 AODP Global Climate 500 Index can be downloaded above.