NGO to rate exposure of ‘whole investment chain’ to perils of warmer planet to protect retirement savings
The trading floor at the New York Stock Exchange. Analysts warn a disorderly move away from fossil fuel-based investments could cause financial instability (credit: Scott Beale / Laughing Squid)
By Alex Pashley
Leading asset managers, consultants, and credit agencies are to face greater scrutiny on how their practices stoke climate change in a set of global rankings.
The Asset Owners Disclosure Project said it would “hold suppliers and advisers to account over control of trillions in the low-carbon transition” as it unveiled a new index on Monday.
A hotter, stormier planet moving out of fossil fuel-based investments could damage the future value of pension and sovereign wealth funds.
Experts compare the spectre of ‘stranded assets’ to the subprime mortgage crisis that wiped trillions off the global economy.
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The AODP is part of a drive towards greater disclosure of investor portfolios, spearheaded by the Financial Stability Board.
The Global Climate Asset Manager Index will rate the top 50 asset managers covering 70% of the market and $40 trillion of investments. It will also target the 20 most prominent asset consultants and ratings agencies like Moody’s and Fitch.
Its indices rely on voluntary disclosure or publicly-available information, but it hopes the initiative will boost transparency.
“The Paris Climate Summit called time on the fossil fuel age and the Financial Stability Board has put climate risk firmly on the agenda,” said CEO of the AODP, Julian Poulter. “Asset owners need to see at a glance which agents are more progressive in the climate transition arena.”
In a survey of 500 leading asset owners last year, 85% did little or nothing to address climate risk. Only 7% had the ability to size up their carbon footprints.
The AODP is expanding its reach by targeting industry consultants, who play key roles in deciding where funds are invested, and ratings agencies who judge the long-term health of companies and countries that export fossil fuels.