Climate Credible Investment
The finance sector supplies a huge amount of capital to fossil fuels. This is incompatible with the Intergovernmental Panel on Climate Change’s (IPCC) position that, if we are to feasibly tackle climate change, we must rapidly decarbonise the world’s energy systems.
We work on climate credible investment initiatives to help make this happen. We engage the finance sector to push for a more sophisticated understanding of the risks and opportunities that climate change, and the associated low carbon transition, represents for their business.
Below is a selection of our current sustainable finance projects and publications.
Mobilising IOSCO to take action on the TCFD recommendations
A new report reveals that investors with a global portfolio suffer due to “regulatory divergence” between countries in terms of climate risk disclosure and corporate governance practice.
In particular, if implementation of the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD) is too slow in some jurisdictions and markets, investors will struggle to accurately assess risks and allocate capital accordingly. The report suggests that IOSCO – the international body bringing together securities regulators – is well placed to address these concerns and offers several suggestions for how IOSCO can exert its influence to help improve the management of climate risk by global capital markets. This is a key step to harmonised climate risk disclosure and widespread implementation of the TCFD recommendations. Full disclosure will not only help companies prepare for climate change impacts, but allow investors to manage risks better and allocate capital accordingly.
Climate Guide for Asset Owners: aligning investment portfolios with the Paris Agreement
We developed this guide for asset owners to show how they can align their investments with the objectives of the Paris Climate Change Agreement.
The guide highlights both the risks and opportunities that climate change represents for investors, using sources from across academia, financial research and databases, as well as drawing on expertise from across the WWF network and our significant experience in engaging with asset owners.
WWF’s view is that aiming to align investments with the Paris Agreement – by taking action in line with the recommendations in this guide – will contribute to investing in the best interests of members and beneficiaries, and will therefore fulfil asset owners’ fiduciary duties. Access the guide >>
Alignment of investment portfolios to a below 2°C world
To understand finance in a world that remains within the 2°C climate scenario, we need to measure what this will look like. So one of our focuses has been the development of tools and forward-looking methodologies to assess the alignment of portfolios with climate goals.
We’ve been engaging with asset owners to assess the alignment of public equity holdings to a 2°C climate scenario using a methodology currently being developed and tested by the Sustainable Energy Investment (SEI) metrics research consortium (external link). WWF is a member of the SEI consortium.
Our green bonds report
Green bonds are a tool that can finance the transition towards a sustainable economy. Creating a large and liquid market in green bonds offers a unique opportunity to boost the volume of capital available. Not only this, but it reduces the cost of debt for projects that drive the transition towards a sustainable economy. We call for collective action towards effective and credible standards for the green bond market. Read more on the report >>
Investing In A Time Of Climate Change
We worked with Mercer consultants and several leading global investors on a report entitled ‘Investing in a Time of Climate Change’. Launched prior to the 2015 Paris COP, this report illustrates, among other things, that keeping global temperature rise below 2°C would not be detrimental to investment returns. We were the only NGO to be part of the project, and we also submitted our own investment portfolio for analysis. This project has created several follow-up opportunities and is a landmark in the areas of scenario analysis and strategic asset allocation.
Our aim is to ensure people’s pension schemes are more ethical and sustainable. The GreenLight campaign encourages pension providers to embed climate-awareness into their investment decisions, into dialogue with companies and into policy advocacy.
We worked to extend some of the findings to publicly listed insurance companies, including the subject of their own investment decisions, asset allocation and stewardship of high carbon industries. Find out more about ShareAction (external link) >>
Our 2013 study with the Oxford’s Smith School demonstrates a new theoretical framework to evaluate and predict the direct and indirect impacts of a divestment campaign.
In this, we show that the real power of the divestment movement comes through indirect effects on fossil fuel companies emerging from increased uncertainty and the process of stigmatization.
Find out more about the Sustainable Finance Programme at the University of Oxford Smith School (external link) >>