While our clients have been interested in our approach, there has been a dramatic upswing in their focus on climate change in the last two or three years. The reasons are obvious: the ratification of the Paris Agreement has signalled a step change in policy action and the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD) has explicitly called on asset owners to report on how they are managing climate change-related risks and opportunities.
Our clients now ask us detailed and in-depth questions about the issuers we hold, how these issuers manage climate-related risks and opportunities, and the actions we are taking to manage climate-related risks in our portfolios.
With this level of attention, we concluded that we needed to put our analysis of issuers on a much more systematic and structured footing, allowing us to present a full cross-portfolio analysis and make meaningful assessments of how we are managing climate-related risks and opportunities.
Our climate risk model is what we believe to be the investment industry’s first comprehensive ranking of how fixed income corporate credit issuers manage their climate change-related risks and opportunities, and how are they are positioning themselves for the transition to a low-carbon economy. The model is designed to be used by institutional investors looking to assess risks and opportunities in their investment portfolios related to climate change.