The world’s three largest environmental investor lobby groups representing almost $21 trillion in assets have outlined seven steps they will jointly expect companies they invest in to take to minimise the risks and maximise the related opportunities presented by climate change. The statement, to be unveiled tomorrow (January 12) at a conference at the United Nations building in New York, is the clearest sign yet of what the biggest shareholders globally will collectively push for in the strategy of companies via corporate engagements and environmental campaigns. It is the first time that the three groups, the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Investors Group on Climate Change (IGCC) in Australia and New Zealand, have made a unified commitment to address concerns about the impact of climate change on their investments.
The seven steps are:
• Clearly define board and senior management responsibilities and accountability processes for managing climate change risks and opportunities;
• Integrate the management of climate change risks and opportunities into the company’s business strategy;
• Make commitments to mitigate climate change risks: define key performance metrics and set quantified and time-bound goals to improve energy efficiency and reduce greenhouse gas emissions in a cost-effective manner; and set goals to address vulnerabilities to climate change;
• Make a systematic review of cost-effective opportunities to improve energy efficiency, reduce emissions, utilize renewable energy and adapt to climate change impacts. Where relevant, integrate climate change considerations into research and development, product design, procurement and supply chains;• Prepare and report comprehensive inventories of greenhouse gas emissions; data should be presented to allow trends in performance to be assessed and it should include projections of likely changes in future emissions;
• Disclose and integrate into annual reports and financial filings, the company’s view of and response to its material climate change risks and opportunities, including those arising from carbon regulations and physical climate change risks;
• Engage with public policy makers and other stakeholders in support of effective policy measures to mitigate climate change risks. Ensure there is board oversight and transparency about the company’s lobbying activity and political expenditures on this topic.
In response, the investor groups said they would commit to analyse and integrate material information on climate risk and opportunity into investment decision-making. They said they would also work much more closely with companies to understand the potential impact of climate change on company value and support responsive strategies and measurement. The groups committed to closer collaboration on corporate environmental engagement and monitoring and to develop sector specific climate disclosure frameworks for the most materially affected sectors. They said they would also publicly back global climate change and clean energy policies that enable effective and economically efficient mitigation of climate change risks. The statement will be formally launched at the Investor Summit on Climate Risk & Energy Solutions, a meeting of 450 global investors.