GLOBAL INVESTOR SURVEY ON CLIMATE CHANGE ANNUAL REPORT ON ACTIONS AND PROGRESS 2011

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GLOBAL INVESTOR SURVEY ON CLIMATE CHANGE ANNUAL REPORT ON ACTIONS AND PROGRESS 2011 About Institutional Investors Group on Climate Change The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration on climate change for investors. IIGCC’s ambition is to provide investors with a voice on climate change and engage with policymakers, companies and investors on addressing long-term risks and opportunities associated with climate change. The group currently has over 80
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  GLOBAL INVESTOR SURVEY ON CLIMATE CHANGE ANNUAL REPORT ON ACTIONS AND PROGRESS 2011  About Institutional Investors Group on Climate Change The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaborationon climate change for investors. IIGCC’s ambition is to provide investors with a voice onclimate change and engage with policymakers, companies and investors on addressinglong-term risks and opportunities associated with climate change. The group currentlyhas over 80 members, including many of the largest pension funds and asset managersin Europe, representing assets of over $10 trillion. In detail, the IIGCC’s objectives are: ã To encourage the adoption of public policy solutions that ensure an orderly andefcient move to a low carbon economy as well as measures for adaptation which areconsistent with long-term investment objectives. ã To encourage a pro-active approach on climate change amongst asset owners andasset managers in order to preserve and enhance long-term investment values. ã To improve climate-related disclosure, reporting and management of climate relatedrisks and opportunities across different asset classes. www.iigcc.org About Investor Network on Climate Risk The Investor Network on Climate Risk (INCR) supports 100 institutional investorswith assets exceeding $10 trillion in addressing the nancial risks and opportunitiesassociated with climate change and related sustainability issues. INCR works with itsmembers on climate-related investment practices, corporate engagement, and disclosureand policy issues.INCR is coordinated by Ceres, a U.S.-based coalition of investors and public interestgroups mobilizing sustainable business practices and solutions to build a healthy globaleconomy.Launched by 10 investors in 2003 at North America’s rst Investor Summit on ClimateRisk hosted by Ceres at the United Nations, INCR has grown to include the leading NorthAmerican institutional investors in shaping responsible investment practices among,state and city treasurers and comptrollers, public and labour pension funds, foundations,other institutional investors and a wide range of asset managers. www.incr.com  About Investor Group on Climate Change The IGCC represents institutional investors, with total funds under management ofapproximately $700 billion, and others in the investment community interested inthe impact of climate change on investments. IGCC’s 60 members aim to encouragegovernment policies and investment practices that address the risks and opportunitiesof climate change, for the ultimate benet of superannuants and unit holders. We alsoaim to: ã Raise awareness of the potential impacts, both positive and negative, resulting fromclimate change to the investment industry, corporate, government and communitysectors; ã Encourage best practices approaches to facilitate the inclusion of the impacts ofclimate change in investment analysis by the investment industry; and ã Provide information to assist the investment industry to understand and incorporateclimate change into the investment decision. www.igcc.org.au  Contents 1Foreword..................................................................................................42Executivesummary...................................................................................53Introduction.............................................................................................7  Methodology / chapter summary.......................................................................... 7 4Investorperceptionsandcommitment........................................................9 Materiality and policy references......................................................................... 9Risk assessment at the asset class level – asset owners........................................ 10Changes to strategy and processes.................................................................... 11Training......................................................................................................... 13Advice........................................................................................................... 13Reporting....................................................................................................... 13 5Engagement...........................................................................................14 Investor action on public policy......................................................................... 14Raising corporate standards............................................................................. 16 6Selectionandmonitoringofexternalmanagers.........................................18  New appointments.......................................................................................... 18 Formalising climate as an investment criterion................................................... 20Monitoring existing managers.......................................................................... 21 7Assessingandanalysingcarbonrisk.........................................................24 Climate risk in due diligence and investment analysis.......................................... 24Quantication of climate impact....................................................................... 24 8Climatechangeinvestmentopportunities..................................................28  A shift towards passive tilts?............................................................................. 30 9AssetClasses.........................................................................................33 Monitoring of climate change issues.................................................................. 33Climate risk reduction and divestments............................................................. 38 Appendix:listofrespondents...................................................................39  GLOBAL INVESTOR SURVEY ON CLIMATE CHANGEANNUAL REPORT ON ACTIONS AND PROGRESS20114 1 Foreword Institutional investors are becoming increasingly concerned that climate change posesa serious challenge to their investments. Despite growing evidence produced by climatescience, global emissions continue to increase, and national and international policyresponses remain inconsistent. Thus, the urgency of action by investors, companies andpolicymakers on climate change continues to grow.This report provides the results of the second global survey of investment practicescoordinated by the three investor networks on climate change – the IIGCC, based in Europe,INCR, based in North America and the Australia/New Zealand IGCC. The report providesan overview of the leading investment practices around the world on climate change andanalyses the drivers for those practices.It is clear from our survey results that credible and consistent climate change legislationand regulation remain critical to encouraging reallocation of institutional capital at scale.What the survey also shows is that leading investors are advancing their practices on anumber of fronts; investing in climate change mitigation measures where they can now; andpreparing to make further investments in future.One of the greatest benets of conducting the Global Investor Survey  is the learningopportunity it provides for the institutional investment community. Even greater informationsharing on climate related investment activities will be necessary in the future to reduce riskfor all investors from a changing climate.Despite the evidence of progress, shown in this report, there is still much scope for improvementin investment practice, and the investor networks will continue to encourage greater focuson climate related issues by asset owners and asset managers; to encourage asset ownersto set clear expectations of their asset managers on taking account of climate risks andopportunities; to make appropriate changes to investment decisions; and to support improvedtransparency and reporting by all institutional investors on climate related investments. Mostcritically, we will continue to collaborate on an active dialogue with governments on adoptingpolicies that accelerate investments in support of a low carbon economy. Donald MacDonald Chairman, IIGCC Mindy Lubber Director of INCR and President of Ceres Frank Pegan Chairman, IGCC Australia/New Zealand
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