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C of E equips investors to monitor climate impact

13 January 2017


Climate impact: a man rides a scooter in severe smog in the Anhui province, central China, last week, after it emerged that companies had violated measures to reduce smog

Climate impact: a man rides a scooter in severe smog in the Anhui province, central China, last week, after it emerged that companies had violated mea...

THE national investment bodies of the Church of England — the Church Commissioners, the CBF, and the Pensions Board — have launched an online data-analysis tool for investors to assess how effectively companies are addressing climate change.

The Transition Pathway Initiative (TPI), created in partnership with the UK Environment Agency Pension Fund and the London School of Economics (LSE), was launched at the London Stock Exchange on Wednesday. It is supported by 13 international asset-owners, and five asset-managers, with more than £2 trillion under management collectively, including Aviva Investors, BNP Paribas Investment Partners, Hermes Investment Management, PGGM, and Standard Life Investments.

TPI intends to offer accurate data, provided by FTSE Russell and processed by the LSE, to enable investors to scrutinise how companies are managing climate-related risks.

This includes tracking the management of greenhouse-gas emissions, and evaluating how the future carbon performance of companies compares with the international targets of the Paris Agreement on climate change (News, 18 December 2015).

The Commissioners were among 130 investors to sign a letter last year urging the leaders of the G20 countries to move faster to ratify the agreement (News, 26 August), which promises to restrict global temperature rises to 2°C above pre-industrialisation levels.

“The international community created the framework in Paris for governments to make national commitments to reducing emissions,” the chief executive of the Commissioners, Andrew Brown, said on Wednesday. “That was a clear signal for the market to act, and TPI is a key response of global asset-owners and -managers.”

Preliminary TPI assessments of 40 companies in the oil and gas and electricity and utilities sectors, presented at the launch by the co-director of the Grantham Research Institute at LSE, Professor Simon Dietz, suggested that almost all (39) were “at least acknowledging” climate change as a business issue. But only seven companies had reached the highest level of strategic assessment, varying from “unaware” to “building capacity”. There was also evidence to suggest that electricity utilities were more advanced than oil- and gas-producers.

A spokesman for the Christian climate-change charity Operation Noah, James Buchanan, welcomed the publication of TPI, but expressed concern over its targets — which, he said, “do not reflect” those made in Paris — and its “lack of urgency”.

TPI will focus initially on companies in the mining, oil-and-gas, Climate impact: automotive, and electricity sectors before rolling out data on other sectors. Access to its website is free.

“The tool is extremely usable, transparent, and anyone will be able to access it,” the co-chairman of TPI, and head of engagement for the Church Commissioners and the Pensions Board, Adam Matthews, said. “We are extremely excited by the initiative, and the partnership we have been able to bring together . . . The potential is considerable, and I hope that the impact will be lasting and make a considerable contribution to the transition to a low-carbon economy.

“This is a significant intervention that puts the Church in a key position in terms of driving the global response to climate change.”

TPI is the result of a climate-change policy drawn up by the Church of England’s Ethical Investment Advisory Group and adopted by the Commissioners and Pensions Board in May 2015. It rules out investment in companies that derive more than one tenth of their revenues from the extraction of thermal coal, or the production of oil from tar.

The First Church Estates Commissioner, Sir Andreas Whittam Smith, said: “TPI will enable us to have a new conversation with companies based on a rigorous understanding of where they sit on the transition to a low-carbon economy, and to follow through on the commitments we have made in our climate-change policy.”


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