PRI in Person: PGGM, CalPERS, ERAFP among first investors to take ‘Montreal Carbon Pledge’

Updates to include Calvert Investments.

Some of the world’s most influential investors including PGGM Investments, the California Public Employees Retirement System (CalPERS) and France’s ERAFP are the inaugural backers of a new portfolio carbon footprint disclosure initiative.

The Montreal Carbon Pledge is being unveiled at the annual PRI in Person event organised by the Principles for Responsible Investment in the Canadian city today (September 25).

The first signatories also include Bâtirente, the Joseph Rowntree Charitable Trust, the UK’s Environment Agency Pension Fund, Calvert Investments and Nordea. All told, the first signatories have more than $500bn in combined assets under management.

By signing the pledge (see below) investors commit to measuring and disclosing the carbon footprint of their investment portfolios on an annual basis.
Overseen by the PRI, the Montreal Carbon Pledge aims to attract $1trn of portfolio commitment in time for the crunch UN Climate Change Conference in Paris next year.
It also allows investors to formalize their commitment to the new Portfolio Decarbonization Coalition, co-founded by the UN Environment Programme Finance Initiative (UNEP-FI) this week.
“The first step to managing the long-term investment risks associated with climate change and carbon regulation is to measure them, and this initiative sets a clear path forward,” said PRI Managing Director Fiona Reynolds.
It comes as a growing number of investors such as ERAFP, Sweden’s Fjärde AP-fonden (AP4), the London Pensions Fund Authority (LPFA) Australia’s VicSuper have already taken steps to measure the carbon footprint of their investments.And it’s in a context where 78% of the largest 500 listed companies now report their carbon emissions.

“It is hard to dispute that carbon is a risk, so how can we fulfil our duty of trust if we don’t implement the systems necessary to assess this risk in order to reduce it and, worse still, having measured the risk, we don’t disclose it to stakeholders,” said ERAFP Chief Executive Philippe Desfossés.

“The main reason to carbon footprint and decarbonize portfolios is not an ethical or moral one for asset owners – it is a financial risk imperative,” said Julian Poulter, Executive Director of the Asset Owners Disclosure Project (AODP), a not-for-profit group which promotes climate disclosure by institutional investors.

The PRI will run an online portal where signatories can not only endorse the pledge but also report the size of their portfolio carbon footprint commitment and carbon reduction targets.

The Montreal Carbon Pledge:

As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that there are long-term investment risks associated with greenhouse gas emissions, climate change and carbon regulation.
In order to better understand, quantify and manage the carbon and climate change related impacts, risks and opportunities in our investments, it is integral to measure our carbon footprint. Therefore, we commit, as a first step, to measure and disclose the carbon footprint of our investments, beginning with our equities portfolios by December 2015, with the aim of using this information to develop an engagement strategy and/or identify and set carbon footprint reduction targets.