CLIMATE CHANGE
Contributing to the transition to a low-carbon economy
Climate change already has significant social, environmental and economic impacts on all continents. These impacts will worsen in the coming years and decades if we don’t act now.
Climate change poses a serious risk to assets and businesses. This is why long-term investors have a responsibility to limit or mitigate their effects.
Committee Leads
Katharine Preston, Vice President, Sustainable Investing at OMERS
Daisy Streatfeild, Sustainability Director at Ninety One
ABOUT CLIMATE CHANGE WHITE-PAPER: TRANSITION AND THE ENABLING ROLE OF TAXONOMIES AND FRAMEWORKS
This paper aims to drive awareness among the broader investor community of how transition finance frameworks and taxonomies can be developed and applied to support decarbonization goals. It builds on existing ILN Thought Leadership, including ‘Investing for the low-carbon transition – Turning Portfolio Targets into Action’, which provided a behind-the-scenes look at leading asset owners’ and asset managers’ early experiences and innovative approaches in delivering portfolio decarbonization goals alongside real-world decarbonization. This paper identified capital allocation toward decarbonizing assets or those in sectors with high transition impact as a key portfolio lever to deliver portfolio alignment.
ABOUT CLIMATE CHANGE WHITE-PAPER: INVESTING FOR THE LOW CARBON TRANSITION
This white-paper provides a behind-the-scenes look at leading asset owners’ and asset managers’ early experiences and innovative approaches to impact real-economy decarbonization, including identifying positive financing opportunities, setting targets and goals, aligning portfolios, evaluating the feasibility of transition plans, engaging with portfolio companies, and encouraging a responsible and managed decline of assets.
Published in September 2022, the ILN Net Zero Investor Playbook helps investors navigate the challenge of transition financing to both meet their decarbonisation goals, and seize the opportunities presented by the transition to net zero.
Part 1 and 2 of this Net Zero Investor Playbook synthesizes the current landscape of relevant investor-specific frameworks and methodologies, and case studies from individual ILN members on their customized implementation approaches. The resources and methodologies are categorized into four themes:
- Portfolio emissions forecasting and target setting
- Alignment with portfolio construction and investment risk parameters
- Portfolio transition taxonomies
- Assessments of portfolio holdings’ transition capacity, and portfolio alignment metrics
Part 3 analyzes the related implementation challenges being experienced by investors, as well as anticipated enhancements to available guidance that will assist investors in moving forward.
Published in November 2021, the ILN Climate Change Physical Risk Toolkit serves as a common framework for asset owners and managers to address direct and indirect physical risks associated with climate change. The Toolkit is complemented by a Resource Guide, which offers investors a searchable database of credible, third party resources to help analyze specific physical climate risk.
In September 2020, the ILN published Climate Change Mitigation and your portfolio: Practical Tools for Investors. This report provides detailed guidance for investors on strengthening climate-related disclosures, focused on decarbonization scenarios in line with the Paris Agreement.
As part of the Climate Change Initiative, ILN members are working to build on existing guidance and best practices to expand the adoption of uniform and comparable climate-related disclosures under the Task Force on Climate-related Financial Disclosures (FSB-TCFD) framework. Published in September 2019, TCFD Implementation, Practical Insights and Perspectives from Behind the Scenes for Institutional Investors is intended to assist investors in making better choices to define their climate change strategies and disclosures.
We believe enhanced disclosure will inform better decision making about the investment risks and opportunities stemming from climate change and the transition to a low carbon economy. The impacts of such decisions can be significant.The ILN will continue to identify gaps where other industry groups and organizations are not focused and develop tools for investors to help in the fight against climate change.
If you would like more information on our work on climate disclosures, please do not hesitate to contact us.