Transition to a low carbon economy

This blog was written by Emma Howard Boyd, Chair of the Environment Agency, Chair of the Environment Agency Pension Fund Investment Committee, and member of the A4S Executive Board.

Emma Howard Boyd and Mark Carney in conversation at the A4S Summit 2016 

If you have struggled to find the right information to help make environmentally and economically sensible investments, you wouldn’t be the first. Historically, many companies have flashed green slogans while keeping real world carbon consumption hidden away. This is known by many in the environmental movement as “greenwash”.
 
Even the Governor of the Bank of England has said one of the major obstacles to a smooth adjustment for a low carbon future is the absence of information to create a market in climate related financial risk.
 
However, times are changing, and companies are increasingly taking their climate risk seriously at a top level. Back in January, I was delighted to launch the Transition Pathway Initiative (TPI), which was set up to help asset managers and investors with the transition to a low carbon future, at the London Stock Exchange.

What is the Transition Pathway Initiative?

The TPI is a global initiative, founded by the Church of England National Investing Bodies and the Environment Agency Pension Fund, which assesses how companies are preparing for the transition to a low carbon economy. It is supported by asset owners and managers with over £4 trillion ($5.2 trillion) of assets under management. We use the results of the TPI’s analysis to inform investment decision making, engagement with companies, and dialogues with fund managers and policy makers. It has so far assessed companies in the Oil & Gas, electrical utilities and coal mining sectors.

How does it work?

The TPI evaluates and tracks the quality of companies’ management of their greenhouse gas emissions and of risks and opportunities related to the low carbon transition. It evaluates how companies’ future carbon performance would compare to the international targets and national pledges made as part of the Paris Agreement and it publishes the results of this analysis through an online tool: http://www.lse.ac.uk/GranthamInstitute/tpi/

Did you say “coal” earlier?

Yes. Earlier this month, we published research showing that many of the world’s leading coal mining companies are failing to manage effectively the business risks arising from climate change. "What did you expect?" You might ask. But there is also demonstrable evidence some companies are making progress in managing the risk of transition to a low carbon economy – even in the coal sector. You can find out more about that here: http://www.lse.ac.uk/GranthamInstitute/tpi/category/news/

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