AIGCC: Integrating Climate Change into Investment Strategy: A Guide for Investors

Release time:2018-11-01

This guide aims to support Asia-based institutional investors (asset owners and managers) on the subject of climate change and to highlight and explore areas of international best practice. 

As the guide highlights, a growing body of investors recognise, that climate change needs to be incorporated into an organisation’s overarching investment strategy as part of fulfilling its fiduciary duty to end-beneficiaries. Indeed, many investors are addressing climate change as part of their broader approach to Responsible Investment (RI) – commonly referred to as the integration of Environmental, Social and Governance (ESG) issues into investment frameworks – and are collaborating to reinforce their actions on climate change. Financial regulators are also beginning to shift to encourage investors to adopt and implement a framework to measure, manage and publicly disclose their climate-related activities. 

By way of illustration, the Taskforce on Climate–Related Financial Disclosure (TCFD) was established as an industry-led, multistakeholder process to improve financial disclosure around climate change including, but not limited to, an organisation’s governance, strategy, risk management and adoption of metrics/targets. 

The TCFD recommendations have received widespread support by international companies and investors, with the industry’s focus now shifting towards adoption and implementation. In addition to evolving financial standards, new and emerging voluntary principles, codes and standards related to the broader agenda of sustainable development and the role of businesses and institutional investors are gaining momentum. Of particular note is the growing support and adoption of frameworks such as the United Nations Global Compact (UNGC) and the UN Sustainable Development Goals (SDGs). 

Building on this momentum, this guide sets out a practical framework to support institutional investors in the integration of climate change considerations into an organisation’s investment strategy. While there is no one-size-fits-all approach, there are some emerging trends and best practice standards that are evolving that include developing a strategic position on climate change and formulating a strategic response.

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