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Leading International Asset Owners Launch Climate Change Investment Initiative

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System Change Not Climate Change by Eoghan Olionnain via flickr

Thirteen of the leading international asset owners have announced a major initiative to ensure that investment decisions are impacted by climate concerns.

The leading international asset owners and five asset managers with over £2 trillion under management launched the Transition Pathway Initiative (TPI) today to better understand how the transition to a low-carbon economy affects their investments. The TPI will assess how individual companies are positioning themselves for the transition to a low-carbon economy through a public, transparent online tool. The heads of funds involved launched the Initiative this morning at the opening of the stock market at the London Stock Exchange.

The Initiative has been led by the Church of England’s National Investing Bodies and the Environment Agency Pension Fund in partnership with the Grantham Research Institute at the London School of Economics. Data has been provided by FTSE Russell.

Preliminary assessments released today include the oil and gas and electricity utilities sectors. As part of a phased rollout, management quality and carbon performance assessments of additional sectors and individual companies will follow in the coming months. The tool has been designed to support the requirements of the Task Force on Climate-Related Financial Disclosures (TCFD), individually profiling future projected emissions against the two-degree target and current public policy commitments.

Preliminary assessments have already highlighted key findings, including:

• Almost all companies assessed are at least acknowledging climate change as a business issue (39 out of 40). However, few companies are at the level of strategic assessment (level 4), meaning most can improve.
• Electricity utilities are marginally more advanced than oil and gas producers.
• The typical company is building capacity (15 out of 40 are at level 2), meaning it explicitly recognises climate change as a significant issue for the business, has a policy commitment to action, has set some form of energy or greenhouse gas emissions target, and discloses its operational greenhouse gas emissions
• The majority of companies also have board oversight of the climate change policy (on level 3; 28/40), and incorporate ESG issues into executive remuneration (on level 4; 34/40).
• The most common factors hindering progress are not having set quantitative targets for reducing operational greenhouse gas emissions (26/40 have not), and not having had operational emissions data verified (22/40 have not).

Adam Matthews, Co-Chair of the Initiative and Head of Engagement for the Church Commissioners and Church of England Pensions Board, said “The Transition Pathway Initiative is a tipping point for the market.

“ The Initiative will identify companies that are aligned with the transition to the low-carbon economy and those most exposed to climate transition risk.

“There can be no doubt about the seriousness with which asset owners are taking account of this risks and it will be a key feature in the discussions we will be having with companies over the coming years.”

Emma Howard Boyd, Chair of the Environment Agency said “Businesses should be able explain to investors how they plan to manage climate change risks, invest and innovate on the way to the zero-carbon economy of the future. With the launch of the Transition Pathway Initiative, asset owners from around the world are sending a strong signal that portfolios will align in the future with companies that are taking the transition to a low carbon economy seriously.”

Professor Simon Dietz, Co-Director of the Grantham Research Institute at the London School of Economics, said “The TPI brings transition risk to life for asset owners and asset managers. As well as allowing investors to objectively compare the progress of companies towards a low-carbon economy, the tool highlights the work governments still need to do to align public policy to the two-degree target agreed in Paris.”

Mark Makepeace, CEO of FTSE Russell, said “The launch of the TPI highlights the growing momentum among asset owners to consider the economic implications of the transition towards a low-carbon economy into their stewardship and investment processes. FTSE Russell has long been a pioneer in ESG and sustainable investing and we are delighted to have been chosen by the TPI as the data and analytics partner for this exciting initiative.”

Frédéric Janbon, CEO of BNP Paribas Investment Partners, said “BNP Paribas Investment Partners is very pleased to be among the asset managers that actively support the Transition Pathway Initiative. It is important for asset managers to partner with asset owners, as by doing so we are able to send a unified message to companies regarding our expectations of them as they position themselves for the transition to a low-carbon economy. It also sends a clear signal to the wider world that we are actively engaging with companies to help them to work towards greater action, as well as disclosure of transition risks, in order that their shareholders can make fully informed investment decisions.”

The online tool developed by the TPI – available at transitionpathwayinitiative.org – tracks a company’s management quality and carbon performance. Management quality assessments will use data from FTSE Russell to assign companies to one of five levels, ranging from level 0 (no recognition of climate change as a significant issue) to level 4 (climate change deeply integrated into a company’s business practices). Performance assessments will compare individual companies with internationally agreed benchmarks made as part of the Paris Agreement. These benchmark emissions pathways will be sector-specific.

Environment

These 5 Green Office Mistakes Are Costing You Money

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eco-friendly green offices
Shutterstock Licensed Photo - By Stokkete | https://www.shutterstock.com/g/cyano

The sudden interest in green business is very encouraging. According to recent reports, 42% of all companies have rated sustainability as an important element of their business. Unfortunately, the focus on sustainability will only last if companies can find ways to use it to boost their ROI.

Many businesses get so caught up in being socially conscious that they hope the financial aspect of it takes care of itself. The good news is that there are plenty of ways to go green and boost your net income at the same time.

Here are some important mistakes that you will want to avoid.

Only implementing sustainability on micro-scale

The biggest reason that brands are going green is to improve their optics with their customers. Too many businesses are making very minor changes, such as processing paperwork online and calling themselves green.

Customers have become wary of these types of companies. If you want to earn their business, you are going to need to go all the way. Bring in a green business consultant and make every feasible change to demonstrate that you are a green organization from top to bottom.

Not prioritizing investments by long-term ROI

It isn’t realistic to build an entirely green organization overnight. You will need to allocate your capital wisely.

Before investing in any green assets or services, you should always conduct a long-term cost benefit analysis. The initial investment for some green services may be over $20,000. If they don’t shave your cost by at least $3,000 a year, they probably aren’t worth the investment.

Determine which green investments will have the best pay off over the next 10 years. Make these investments before anything else. Then compare your options within each of those categories.

Implementing green changes without a plan

Effective, long-term planning is the key to business success. This principle needs to be applied to green organizations as well.

Before implementing a green strategy, you must answer the following questions:

  • How will I communicate my green business philosophy to my customers?
  • How will running a green business affect my revenue stream?
  • How will adopting green business strategies change my monthly expenses? Will they increase or decrease them?
  • How will my company finance green upgrades and other investments?

The biggest mistake that too many green businesses make is being overly optimistic with these forecasts. Take the time to collect objective data and make your decisions accordingly. This will help you run a much more profitable green business.

Not considering the benefits of green printing

Too many companies believe that going paperless is the only way to run a green organization. Unfortunately, going 100% paperless it’s not feasible for most companies.

Rather than aim for an unrealistic goal, consider the option of using a more environmentally friendly printer. It won’t be perfect, but it will be better than the alternative.

According to experts from Doranix, environmental printers have several benefits:

  • They can process paper that has been completely recycled.
  • They consume less energy than traditional printers.
  • They use ink that is more environmentally friendly.

You want to take a look at different green printers and compare them. You’ll find that some will meet your needs as a green business.

Poorly communicating your green business strategy to customers

Brand positioning doesn’t happen on its own. If you want to run a successful green business, you must communicate your message to customers as clearly as possible. You must also avoid the appearance that you are patronizing them.

The best approach is to be clear when you were first making the change. I’ll make an announcement about your company‘s commitment to sustainability.

You also want to reinforce this message overtime by using green labels on all of your products. You don’t have to be blatant with your messaging at this stage. Simply provide a small, daily reminder on your products and invoices.

Finally, it is a good idea to participate in green business seminars and other events. If your community has a local Green Chamber of Commerce, you should consider joining as well.

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Energy

Responsible Energy Investments Could Solve Retirement Funding Crisis

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Energy Investments
Shutterstock / By Sergey Nivens | https://www.shutterstock.com/g/nivens

Retiring baby-boomers are facing a retirement cliff, at the same time as mother nature unleashes her fury with devastating storms tied to the impact of global warming. There could be a unique solution to the challenges associated with climate change – investments in clean energy from retirement funds.

Financial savings play a very important role in everyone’s life and one must start planning for it as soon as possible. It’s shocking how quickly seniors can burn through their nest egg – leaving many wondering, “How long your retirement savings will last?

Let’s take a closer look at how seniors can take baby steps on the path to retiring with dignity, while helping to clean up our environment.

Tip #1: Focus & Determination

Like in other work, it is very important to focus and be determined. If retirement is around the corner, then make sure to start putting some money away for retirement. No one can ever achieve anything without dedication and focus – whether it’s saving the planet, or saving for retirement.

Tip #2: Minimize Spending

One of the most important things that you need to do is to minimize your expenditures. Reducing consumption is good for the planet too!

Tip #3: Visualize Your Goal

You can achieve more if you have a clearly defined goal in life. This about how your money can be used to better the planet – imagine cleaner air, water and a healthier environment to leave to your grandchildren.

Investing in Clean Energy

One of the hottest and most popular industries for investment today is the energy market – the trading of energy commodities. Clean energy commodities are traded alongside dirty energy supplies. You might be surprised to learn that clean energy is becoming much more competitive.

With green biz becoming more popular, it is quickly becoming a powerful tool for diversified retirement investing.

The Future of Green Biz

As far as the future is concerned, energy businesses are going to continue getting bigger and better. There are many leading energy companies in the market that already have very high stock prices, yet people are continuing to investing in them.

Green initiatives are impacting every industry. Go Green campaigns are a PR staple of every modern brand. For the energy-sector in the US, solar energy investments are considered to be the most accessible form of clean energy investment. Though investing in any energy business comes with some risks, the demand for energy isn’t going anywhere.

In conclusion, if you want to start saving for your retirement, then clean energy stocks and commodity trading are some of the best options for wallets and the planet. Investing in clean energy products, like solar power, is a more long-term investment. It’s quite stable and comes with a significant profit margin. And it’s amazing for the planet!

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