Efforts by 10 large assets owners to identify and manage climate-related risks in their portfolios have been highlighted in a series of profiles by Ceres.
The profiles outline initiatives undertaken by the assets owners to help limit global warming to no more than 1.5 degrees Celsius.
The Portfolio Climate Risk Management case studies were developed in collaboration with several global investor networks: Asia Investor Group on Climate Change, Investor Group on Climate Change and Institutional Investors Group on Climate Change.
The Ceres Investor Network on Climate Risk and Sustainability has 175 institutional investor members with a combined $30 trillion under management. Member Impax Asset Management funded the case studies.
The 10 asset owners profiled in the case studies are:
- The 381.3 billion kroner ($40.8 billion) AP2, Gothenburg, Sweden.
- The £30 billion ($38.4 billion) Brunel Pension Partnership, Bristol, England.
- Cathay Financial Holding Co.
- The C$340.1 billion ($253.4 billion) Caisse de Depots et Placement du Quebec, Montreal.
- The C$22 billion ($15.6 billion), OPTrust, Toronto.
- The C$207.4 billion ($158.7 billion), Ontario Teachers' Pension Plan, Toronto.
- The 560 billion Danish kroner ($81.2 billion) PFA Pension of Denmark.
- PGGM, manager of the €238.4 billion ($267 billion) Pensioenfonds Zorg en Welzijn, Zeist, Netherlands.
- The $24.8 billion Wespath Investments and Benefits, Glenview, Ill.
- The NZ$46.7 billion ($31 billion) New Zealand Superannuation Fund, Auckland.
The case studies show a range of qualitative and quantitative strategies being used to assess and manage climate-related risks. They range from carbon footprinting of different asset classes to scenario analyses of how portfolios may fare under various climate policy and transition scenarios.
Some funds use service providers to develop quantitative models to estimate the impacts of transition risk, physical risk, or both. Most funds use corporate engagement to manage risk, and some have reduced holdings in companies with high greenhouse gas emissions and insufficient transition strategies.
All of the funds profiled are pursuing low-carbon investment strategies to invest in climate solution opportunities across various asset classes, including renewable energy and energy efficiency technologies, green real estate and green bonds.