Transitioning to low carbon
To achieve the Paris Agreement’s goals and limit global temperature rise to no more than 1.5 degrees Celsius above pre-industrial levels, it is necessary to significantly increase the level of new investment in low carbon technologies and energy efficiency, and to reduce investments in high impact sectors and activities, including the extraction and use of fossil fuels.
The scale of the collective – public and private – challenge is clear. For example, Mission2020 has called for 1 percent of global investor assets to be allocated to low carbon assets, the Climate Bonds Initiative has targeted a total of US$1 trillion of total green bonds issuance by 2020, and the Intergovernmental Panel on Climate Change (IPCC) estimated in a 2018 report that the world must invest an average of $2.4 trillion in clean energy every year through 2035 and cut the use of coal to almost nothing by 2050 in 1.5 degrees Celsius-consistent pathways.
Making low carbon investments, phasing out investments in thermal coal, and integrating climate change into portfolio analysis and decision-making are consistent with investors’ fiduciary duties.
Make and report our new low carbon investments and our new low carbon investment commitments
We have committed to increasing our investments in appropriate low carbon opportunities such as renewable energy, energy efficiency, low carbon transportation, energy storage and energy efficient buildings.
Phase out our investments in thermal coal
We have committed to phasing out our investments in thermal coal activities (specifically thermal coal mining and coal-fired power generation).
Integrate climate change into our portfolio analysis and decision-making
We have committed to integrating climate change-related risks and opportunities in our portfolio analysis and decision-making processes through one or more of:
- Analyzing and assessing climate change-related risks and opportunities (e.g. through carbon footprinting, scenario analysis).
*Making commitments and setting targets (e.g. to carbon footprint reduction, to enhanced portfolio resilience, to decarbonization, including via the Portfolio Decarbonization Coalition).
- Investing in low carbon investment funds and other products (e.g. low carbon indices, climate-aligned bonds).
*including through the Montreal Carbon Pledge
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Note 1: The following are considered eligible investments for the purposes of this question:
Passive or active index funds with (a) an explicit carbon weighting, overlay (tilting) or exclusion, or (b) a target of achieving a % emissions reduction below the index benchmark.
Actively managed funds with (a) a target of achieving a % emissions reduction below the selected benchmark, or (b) involving divestment or stock exclusions.
Exchange traded funds with an explicit emissions reductions target for the fund.
Low carbon funds with a minimum 50% value derived from low carbon assets and activities as listed in the Low Carbon Investment Registry Taxonomy or in the Climate Bonds Investment Taxonomy.
Holdings in technology or service companies, where at least 50% of the company’s value is derived from low carbon technologies, activities and services.
Investments in renewable energy and other low carbon assets and activities as listed in the Low Carbon Investment Registry Taxonomy or in the Climate Bonds Investment Taxonomy.