The P2 Project, jointly with Mercer Investment Consultants, held successful events in Montreal and Winnipeg looking at the implications of climate change for investment decision-making. The events featured leading Canadian climate scientists who provided overviews of the latest climate science and the emerging risks and impacts of climate change for investors. Following, Mercer provided the workshop participants with some tools to use to minimize the investment risks from climate change.
Below are links to the presentations made at both events.
Climate Change: The Big Picture
Dr. Danny Blair, Principal, Richardson College of the Environment and Acting Dean of Science, University of Winnipeg
Impacts of Climate Change for Canada: Risks and Opportunities for Investors
Henry David Venema, PhD, Director, Natural and Social Capital, International Institute for Sustainable Development (IISD)
Global Climate Changes and Impacts from Ongoing Greenhouse Gas Emissions
Dr. Damon Matthews, Associate Professor, Geography, Planning and Environment, Concordia University
Sector Focus: The Impacts of Climate Change on Agricultural Production
Dr. Navin Ramankutty, Associate Professor, Department of Geography, McGill University, Tier II Canada Research Chair in Land Use and Land Cover Change
Understanding the Impacts of Climate Change
Jane Ambachtsheer, Partner and Global Head of Responsible Investment Mercer (Winnipeg)
Elisabeth Bourqui, PhD, Principal, Head of Responsible Investment Canada, Mercer (Montreal)
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The Swedish Fund AP1 has indicated it will shift its portfolio towards “real assets” – property, farmland, timber and infrastructure – to try to deal with the investment implications of climate change.
It is taking on board the recommendations of the groundbreaking report from consulting firm Mercer,Climate Change Scenarios – Implications for Strategic Asset Allocation, that was released earlier this year. AP1 was one of 14 international institutional investors to participate in the project.
“The findings in the climate report have strengthened the Fund’s conviction in the necessity of raising the share of real assets in the portfolio, for example through investments in real estate, agricultural land, timberland and infrastructure,” AP1 says in its new first-half report.
Read more from Responsible-Investor.com (subscription required).
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On January 19, 2011 WWF-Canada released a report highlighting climate change as a new risk for institutional investors, and providing insights in carbon risk assessment of an investment portfolio. The report, Carbon Counts: Assessing the Carbon Exposure of Canadian Institutional Investment Portfolios was prepared for WWF-Canada by Mercer and Trucost to identify the carbon exposure of Canadian institutional pooled investment products.The report provides a quantitative assessment of the carbon impact of Canadian institutional investors’ portfolios by analyzing the greenhouse gas emissions and associated risks generated by the companies held in these institutional portfolios.
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RI talks with Ole Beier Sørensen, chairman of the Institutional Investors Group on Climate Change, who believes the COP16 international conference on climate change could be the moment when the potential role of institutional investors in financing climate change solutions becomes a serious and practical discussion topic. Ahead of the Cancun conference, a group of 259 investors with combined assets of more than $15trn (€11.1trn) released an investor statement calling for policies to “unlock the vast potential” of low carbon markets. It was the biggest ever investor statement on climate change policy, and in a notable addition to the standard request for long-term policy, the investor statement called for multilateral development banks and other development finance institutions to apply “risk-reducing finance tools” to assist market development and scale up private investment. Read more
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The Institutional Investors Group on Climate Change (IIGCC), a group of investors with some $5trn in combined assets, have issued a dramatic plea on climate change regulation to the European Union.
They are urging the EU to come to a quick decision on whether or not to unilaterally set a more ambitious emission reduction target for 2020. They say significant benefits can be achieved if the EU moves to signal an ambitious longer-term target for 2030 or 2035.
They claim the bloc’s Emissions Trading Scheme (ETS) has not yet provided investors with the “strong, long-term price signals” needed to commit to long-term low carbon investments. Read more
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Sir Nicolas Stern has warned that pension funds must shift assets into low-carbon energy to drive long-term returns. He told delegates at the Reuters Global Energy Summit that investing long-term in “dirty technologies” is risking clients’ money. Stern, the author of an influential UK government report on global warming and a professor at the London School of Economics, is working with consulting firm Mercer on a project with Norway’s Global Pension Fund on global warming, capital markets and pension fund investors. Read more
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In response to the Deepwater Horizon oil leak, which is estimated to be spilling about 5,000 barrels of oil a day into the Gulf of Mexico, Ceres president Mindy Lubber, said: “Our fossil fuel dependence is increasingly and dangerously unsustainable, economically as well as environmentally, and has enormous social and environmental costs not accounted for in the price of a barrel of crude.”
Ceres coordinates the Investor Network on Climate Risk (INCR), an alliance of more than 90 institutional investors and financial firms that collectively manage nearly $10 trillion in assets. BP, the UK oil giant, which owns the drilling rights for Deepwater, has seen tens of billions wiped off its share price since the explosion on the rig, which killed 11 people.. Read more
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To make climate change a material factor in investment analysis and decision-making, pension funds really need to raise their game, argues Rory Sullivan.
In January 2010, the Investor Network on Climate Risk published a report examining how US asset managers take account of climate change-related risks and opportunities in their investment processes. The findings were broadly similar to the findings of similar studies from the Institutional Investors Group on Climate Change, namely that relatively few investors integrate consideration of climate change risks and opportunities across all of their assets, that investors are still developing the tools necessary to analyse these risks and opportunities, and that the primary focus is regulation, with adaptation receiving relatively little attention. Read more.
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The impact of ESG factors on investment returns, [Roger Urwin, global head of investment content at Towers Watson argued], had reached a “tipping point”, based on the progression of climate science and increasing evidence of natural resource depletion. He argued that investing in sustainability mandates could act as a hedge against the potential impact of climate change on other investments in institutional portfolios. Read more.
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Danish pension fund chief Rohde says pension funds need to be first movers on climate change investments.
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Those who study the future, helping those who can change the future.
The P2 Project supports climate scientists internationally in their efforts, both individually and collectively, to engage constructively with pension funds on the risks and opportunities presented by the climate crisis. Our vision is to contribute to a fundamental shift in pension fund investment practices that will help move the world closer to sustainability while at the same time protecting pension benefits.
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