PRI leads action on climate risk

In an era where our changing climate has become one of the greatest threats to both society as a whole, business and the long-term profitability and sustainability of companies and markets, the Principles for Responsible Investment (PRI) Initiative is supporting signatories to take action on climate risk.

The Montreal Pledge

The Montreal Carbon Pledge allows investors (asset owners and investment managers) to formalise their commitment to the goals of the recently announced Portfolio Decarbonisation Coalition, which will mobilise investors to measure, disclose and reduce their portfolio carbon footprints at the scale of hundreds of billions of dollars by the December 2015 UN Climate Change Conference. By signing onto the Montreal Carbon Pledge, investors commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis. Launched on 25 September 2014 at PRI in Person in Montreal, the Pledge is supported by both the PRI and the United Nations Environment Programme Finance Initiative (UNEP-FI). Find out more at montrealpledge.org

Caring for Climate

The PRI is a strategic partner of the Caring for Climate initiative, a partnership between the UN Global Compact, UN Environment Programme and UN Framework Convention on Climate Change. Caring for Climate is the UN’s Initiative for Business Leadership on Climate Change.

The PRI is also a partner for the annual Caring for Climate Business Forum occurring in Lima, Peru in December 2014 during COP20/CMP10. The Forum seeks to serve as a channel for the private sector to make genuine contributions to climate change negotiations annually and will provide business and investors a platform for exchange and collaboration with governments, civil society and UN through numerous thematic sessions linked to the UNFCCC agenda. Participation is by invitation only.

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Global Investor Statement on Climate Change

More than 360 global institutional investors representing over US$ 24 trillion in assets have called on government leaders to provide stable, reliable and economically meaningful carbon pricing that helps redirect investment commensurate with the scale of the climate change challenge, as well as develop plans to phase out subsidies for fossil fuels. Investors including Blackrock, CalPERS, PensionDanmark, Deutsche Asset & Wealth Management, South African GEPF, Australian CFSGAM and Cathay Financial Holdings have signed the statement among many others. Find out more here.

Low Carbon Investment Registry

The Global Investor Coalition’s Low Carbon Investment Registry identifies how institutional investors are directing capital towards low carbon assets. Asset owners around the world are encouraged to add examples to the Registry leading up to the climate negotiations in Paris 2015. Find out more about the Registry here.

Working with partners

The PRI is working with UNEP Finance Initiative (UNEP FI), the Institutional Investors Group on Climate Change (IIGCC), the Investor Group on Climate Change (IGCC), Ceres/Investor Network on Climate Risk (INCR), the Asian Investor Group on Climate Change (AIGCC) and CDP (formerly Carbon Disclosure Project) on a number of climate initiatives.

Climate-related engagements

Water risks, hydraulic fracturing and palm oil are key areas with significant links to climate change. The PRI is coordinating a number of engagements to work with companies that have exposure in these areas. Going forward, the PRI is considering next steps in collaborative engagements on climate change. A decision on any potential engagement is expected in late 2014 or 2015.

  • Water Risks
    This engagement focuses on improving management of water risks in companies’ supply chains. Global listed companies in the food, beverages and textiles sector, who are significant users of water, and are often reliant on agricultural inputs from water-scarce regions, are the targets of this engagement.
  • Fracking
    Fracking operations can have significant environmental and social impacts on water resources, local communities and through greenhouse gas emissions. This engagement focuses on global energy companies, including exploration, production and oilfield service companies who have fracking operations. The engagement aims to increase company disclosure and improve risk management practices.
  • Palm Oil
    The palm oil industry is a leading contributor to deforestation in South East Asia and a significant greenhouse gas emitter due to land use changes. A PRI led working group is pushing for improvements in company practices to support the development of a more sustainable palm oil industry.

More information about climate related engagements is available here.

Investor Education and Implementation Support

Our guidance includes an integrated analysis report with practical case studies indicating how climate change can be integrated into investment analysis for actively managed equities. Additionally, our new private equity guide includes case studies on how energy efficiency can be factored into the investment cycle.

A range of publications and several interactive webinars have also been used to support the broader climate work of the PRI, including:

Publications

RI Quarterly – climate focus (April 2014)
Local Government Super – hedging against climate risk case study (October 2013)
Environment Agency Pension Fund – approach to ESG in environmentally themed investments case study (October 2013)
Integrating climate change impacts into the regulatory approvals process of a UK water business – Industry Funds Management – case study (August 2013)

Webinars

Climate Summit and Investor Statement (July 2014)
Climate change and financial risk to oil capital expenditure (May 2014)
Property investors’ perspective on climate change policy (October 2011)
Climate change and strategic asset allocation (March 2011)
Investor views on climate policy: From Cancún to Durban (Webinar 2011)
Credit quality and climate change policy in the US (January 2011)

Additionally, a range of climate related sessions were held at PRI’s annual event PRI in Person 2014. Full details are available here.
For more information on the climate focused initiatives led by the PRI, please contact Sagarika Chatterjee, General Manager.