22 global asset owners worth over $1.8 trillion share their real-world strategies for successfully managing the risks and opportunities of climate change in a new best practice guide launched today.
The guide is designed to provide asset owners with a peer-led approach to navigating an increasingly complex environment marked by escalating systemic climate-related financial risks and regulatory landscapes under pressure to enact stricter climate-related disclosures.
Called ‘Winning Climate Strategies: Practical solutions and building blocks for asset owners from beginner to best practice’, the report by AODP, part of the responsible investment organisation ShareAction, draws from a range of in-depth interviews. The report explores the current best practices landscape, identifies common barriers, and presents a framework of industry-tested building blocks, which are relevant for other asset owners at earlier stages of their climate strategy journeys.
The interviewees, including Aviva, New York State Common Retirement Fund, Elo Mutual Pension Insurance Company, and Ilmarinen Mutual Pension Insurance Company, varied significantly by size, geographic location, and category, highlighting that best practice is achievable for all types of asset owners. The report reveals that there is no single best approach to achieving a successful climate strategy, with leaders found to be systemically and holistically responding to climate-related issues in creative and innovative ways.
Analysis by AODP reveals a spectrum of common approaches shared by leaders, some of which include setting climate-related targets, embedding low-carbon across asset classes, training key decision-makers on climate issues, driving commitments from asset managers, and exploring forward-looking climate-risk assessments (including scenario analysis). Engagement is also identified as a priority area, especially with investee companies, members and policy-makers.
To guide asset owners at early stages of their climate strategy journeys, the report presents a framework of ten building blocks based on the experiences and recommendations of leaders, offering a unique industry-level perspective of simple, cost-effective and impactful steps relevant for asset owners of all types.
Peter Uhlenbruch, AODP Investor Engagement Officer at ShareAction and report author, says: “There are many asset owners out there who may be feeling a bit overwhelmed as how to begin responding to the enormous investment-related challenges presented by climate change. This guide, based on real experiences from leaders in the field, proves best practice is possible for all types of asset owners and offers an easy-to-navigate compass for the journey from first steps to climate strategy leadership.”
Mikko Kosonen, Finnish Innovation Fund’s President, says: “Practices for capturing climate change in asset owners’ processes are being continuously developed, which is why it is important to share learnings and best practices. As this report suggests, asset owners of all sizes and regions can reach best practice standards.”
Rick Stathers, CDP’s Global Director of Investor Initiatives, says: “Investors are increasingly recognizing the need to rapidly decarbonize the global economy and their portfolios in order to lessen climate change’s impact to financial returns and their beneficiaries’ quality of life and to avoid the potentially catastrophic scenarios of going beyond 2C of warming. This guide provides valuable support to all asset owners on the actions their peers have already taken and the steps they can take to develop and implement climate-resilient investment strategies.”
Edward Mason, the Church Commissioners for England’s Head of Responsible Investment, says: “The Church Commissioners are strong advocates of investor collaboration on climate change. We don’t do anything alone. The more investors work together, the more influence they will have with policy makers and companies, and the more likely it is that they will help bring about the transition to a low carbon economy upon which the health of our economic, environmental and social system depends.”
Robert Schuwerk, Carbon Tracker’s Executive Director for North America, says: “The AODP Winning Climate Strategies report provides a range of insights from global asset owners on how they are mitigating risks from a low-carbon transition, but notes that obstacles remain—including sufficiently standardised and assured data from investee companies. It will be interesting to see how asset managers, policymakers and regulators respond in filling this information void.”
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Notes for editors:
- For more information contact Peter Uhlenbruch at: firstname.lastname@example.org.
- The report is available on the AODP website here.
- The press release is also available on the ShareAction website here.
- About AODP: The Asset Owners Disclosure Project (AODP) rates and ranks the world’s largest institutional investors and assesses their response to climate-related risks and opportunities. The ratings are made public, providing much-needed transparency for beneficiaries, clients, investors and stakeholders, and emphasised through advocacy and direct engagement to drive change. As the only comprehensive, climate-specific, independent, non-self-selective assessment, AODP prides itself on being the world’s benchmark of climate leadership in the investment system.
- In June 2017, ShareAction announced an agreement to take over the reins of the Asset Owners Disclosure Project (AODP). ShareAction has undertaken annual benchmarking studies of the financial services sector on environmental, social and governance issues since 2006. AODP’s next assessments will cover the global pension fund and the asset management sectors.
- ShareAction is a campaigning organisation with a mission to turn the investment system into one that truly serves savers, communities, and protects our environment for the long term.