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Climate change has become a central issue for financial markets. The global task force on climate risk set up by the G20’s Financial Stability Board (FSB) recently announced that it will make recommendations on how institutional investors, asset managers and other financial intermediaries should report the potential impact of climate change on their bottom line. Climate risk is of course only one risk that investors have to analyse. We acknowledge this. However, as a multi-sector, multi-asset class and non-diversifiable risk, its scale and profile require special attention.

The Asset Owners Disclosure Project is the world’s only independent examination of asset owners’ management of climate risks and opportunities. In addition, this year AODP is extending its research to include the world’s most influential asset managers, investment consultants, proxy advisers and ratings agencies on how they are incorporating climate risk management and low-carbon investment into the service they provide to their clients. Modelled on AODP’s annual Global Climate 500 Index, these new indices will be based on direct disclosure and/or publicly available information and will analyse how institutions within the investment chain are managing climate risk, investing in the low-carbon economy and engaging with investee companies on these issues.

AODP provides valuable research and tools to support asset owners in the transition to an investment world in which the impacts of climate change will become ever more integrated into their core decision-making processes. The data collected provides asset owners (and their stakeholders) with valuable insight into the strategies deployed by some of the largest asset owners in the world to mitigate the risk of climate change. The survey encourages funds to engage in climate change-related issues, often for the first time.

AODP seeks to better understand industry practices and highlight the actions being taken by key industry participants on this critical topic. Click on the links below for more information.

 

The 2016 disclosure window is open until November 30th, 2016. Please get in touch if you’d like to take part.

Asset Owners    Asset Managers      Investment Consultants     Proxy Advisors     Ratings Agencies


HOW IS THE SURVEY STRUCTURED?

The survey assesses a participant’s capability across the following key areas:

Governance / The organisation structure and the interactions it uses to oversee its climate risk objectives.

Strategy / The Degree of integration of climate risk principles in the organisation’s policies and processes.

Portfolio Risk Management / A variety and effectiveness of tools and approaches used to evaluate and manage portfolio climate change risks.

Metrics and Targets / Key metrics to measure, monitor and compare portfolio climate risk management performance.


HOW DOES THE RATINGS PROCESS WORK?

The AODP Global Climate Index provides stakeholders with a ranking and rating to indicate how each organisation performs in managing their exposure to climate risk. The objective of the research is to encourage integration of climate change capability in portfolio management across the investment sector.

Organisations are researched by our team of analysts using publicly available information or information provided to us by your members or stakeholders. This is supplemented by survey responses. The data collected is used to rank and rate the participants to create the AODP Global Climate Indices. Organisations are rated from AAA through to D grade, with an additional X rating for those lacking any evidence of managing climate risk.

Asset Owners / The world’s largest long-term investors (pension funds, insurers, sovereign wealth funds, foundations and endowments) with at least USD 2 billion assets under management.

Asset Managers / Asset managers play a key role in investing the capital critical to transitioning to a low carbon economy. The top 50 largest asset managers globally have been invited to participate in the first AODP Asset Managers Index.

Investment Consultants / As primary advisers to asset owners for asset allocation and/or manager selection, asset consultants play a key role in deciding where funds will be invested.

Proxy Advisors / As the route through which many asset owners engage with the market, proxy advisers play a critical role in determining whether companies shift to low-carbon business models.

Ratings Agencies / Ratings agencies have a vital role to play in assessing the long-term prospects of fossil fuel companies and the sovereign debt of countries that export fossil fuels.


BENEFITS OF PARTICIPATING…

The AODP is of great benefit to asset owners, the broader investment industry and governments to help clarify capability in managing climate risk. The ratings present the only opportunity for organisations to compare and differentiate themselves from their peers in terms of climate change risk management. By participating, you send a strong signal to your stakeholders that you are taking climate change seriously. Members and other stakeholders increasingly demand transparency on ESG issues, and completing the Global Climate Index Survey can be one means of meeting these expectations.

  • Gain valuable insights into your performance relative to others in your industry.
  • Learn how to apply best practice in managing climate change risks and opportunities.
  • Demonstrate to your stakeholders your commitment to managing one of the largest long-term risks to their portfolio
  • Use our risk based approach as an alternative to a pure divestment strategy.
  • Improve your rating by directly disclosing the information we need to effectively assess your organisation.

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