What is the Montréal Carbon Pledge?
By signing the Montréal Carbon Pledge, investors commit to measure and publicly disclose the carbon footprint of their investment portfolios on an annual basis.
The Pledge was launched on 25 September 2014 at PRI in Person in Montréal, and is supported by the Principles for Responsible Investment (PRI) and the United Nations Environment Programme Finance Initiative (UNEP FI). Overseen by the PRI, it aims to attract commitment from portfolios totalling US$3 trillion in time for the United Nations Climate Change Conference (COP 21) in December 2015 in Paris.
Who is the pledge open to?
The pledge is open to all asset owners and investment managers – you do not need to be a PRI signatory. There are already over thirty signatories to the pledge from North America, Europe and Australia. These include ERAFP, PGGM Investments, Batirente and CalPERS. (For a full list see the Signatories page).
What is a portfolio carbon footprint?
A portfolio’s carbon footprint is the sum of a proportional amount of each portfolio company’s emissions (proportional to the amount of stock held in the portfolio). A carbon footprint is a useful quantitative tool that can inform the creation and implementation of a broader climate change strategy.
What should I measure, and how often?
To meet the requirements of the Montréal Carbon Pledge, you must annually measure the carbon footprint of an equities portfolio, or portion thereof. We also consider a carbon footprint of other asset classes, including private equity.
How should I disclose my carbon footprint?
Disclosure must be through your website, annual report, sustainability report, responsible investment report or other publicly visible client/beneficiary reporting channel.
Why would I want to measure my portfolio’s carbon footprint?
Investors who have already measured the carbon footprint of portfolios say that doing so can: improve their understanding of the portfolio risks and opportunities that climate change presents; give them answers to stakeholder questions on climate change; allow them to publicly demonstrate commitment to tackling climate change. (See more detailed notes here).
How do I pick a provider, and are any recommended by the PRI?
What do I need to tell the PRI?
When you sign the pledge, tell us your organisation name and total assets under management, along with an email address. We also need to know the value of the assets under management that you will measure the carbon footprint of – if you do not know this when you sign the pledge, please tick “to be determined” and let us know by 1 September. We do not require any holdings data.
Are there any costs?
No – there is no charge for signing the pledge. However, if you decide to use a service provider to measure your carbon footprint, this may incur a cost.
If I measure a carbon footprint, do I have to divest?
Measuring the portfolio’s carbon footprint simply helps you understand your emissions: if and how that information is acted on varies from one investor to another. Options include: continuing to monitor emissions regularly to ensure these are tracked and understood, engaging with companies on emissions disclosure and/or management, reducing exposure to carbon-intense holdings, investing in low-carbon solutions, and integrating environmental analysis into mainstream investment processes.
Signing the Montreal Carbon Pledge is simply a commitment to measure and disclose the carbon footprint – it does not compel any further action, although the PRI encourages Pledge signatories to review the carbon footprint they produce and consider what approach might be most appropriate for them.
How does the Montréal Carbon Pledge relate to the Portfolio Decarbonization Coalition?
The Portfolio Decarbonization Coalition (PDC) is a multi-stakeholder initiative that will drive GHG emissions reductions by mobilising a critical mass of institutional investors committed to gradually decarbonising their portfolios.
PDC’s disclosure target: Between September 2014 and COP21 the PDC will help build a community of institutional investors measuring and disclosing the carbon footprint of a total of at least US$500 billion of assets under management. The delivery mechanism for this target is the Montreal Pledge of the Principles for Responsible Investment (PRI).
PDC’s decarbonisation target: Between September 2014 and COP21 the second goal is to assemble a coalition of investors who in aggregate will commit to decarbonizing at least US$100 billion in institutional investment across asset classes.
Investors can sign the Montréal Carbon Pledge without joining The Portfolio Decarbonization Coalition, or can join both initiatives.