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Financing a resilient climate

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

The report Mobilising IOSCO to take action on the TCFD recommendations 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 change reporting and disclosure

We work across the WWF network and with other NGOs to actively influence the recommendations of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD), the European Commission’s High-Level Expert Group on Sustainable Finance (HLEG), the G20, and stock exchanges to increase transparency and improve reporting and disclosure of climate risks and opportunities.

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. 

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. WWF is a member of the SEI consortium.

Fossil Fuel Divestment and the Make My Money Matter Campaign

A recent WWF report shows that up to 30% of shareholdings in fossil fuel companies active in the sensitive Arctic region are from UK pension funds. The WWF is supporting ShareAction’s Make My Money Matter Campaign to raise awareness of the volume of finance being channelled to such unsustainable investments through individual and company pensions.

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.

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