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Climate change could change everything

Because we believe climate change poses risks to economies, markets, and therefore, our clients' portfolios, we seek to study the science, engage with clients and companies, and develop related tools and investment approaches.

Robust climate science collaboration

We believe climate change will impact capital markets, creating new risks and opportunities. Working with Woodwell Climate Research Center, one of the world’s leading independent climate research institutes, we research physical climate risks and integrate science-based insights and projections into investment decisions made on our clients’ behalf.

Our climate commitment and approach

Aligned with the Task Force on Climate-related Financial Disclosure recommendations, this report describes our data-driven processes for monitoring, evaluating, and managing material climate-related risks and opportunities. We also describe our approach to engagement on climate change. Finally, we outline the processes, metrics, and output of our own climate disclosures.

Deep climate research

Working with Woodwell has helped us understand the inextricable linkages between these climate risk categories. We engage with companies to help them build resiliency to both.

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Risks
  • Heat
  • Hurricanes
  • Droughts
  • Floods
  • Wildfires
  • Water scarcity
  • Sea-level rise
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Financial impacts
  • Wider credit spreads
  • Agricultural damage
  • Business revenue risk
  • Infrastructure risk
  • Insurance risk
  • Stressed health care systems
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Opportunities
  • Water treatment
  • Sustainable construction
  • Renewables
  • Resilient infrastructure
  • Climate-resilient crops
  • Energy storage
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Risks
  • Carbon taxes
  • Emissions-trading systems
  • Land-use regulation
  • Environmental malpractice
  • Class-action lawsuits
  • Electrification
  • Technology
  • Consumer activism
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Financial impacts
  • Changing cost of capital
  • Real estate devaluation
  • Devaluation in fossil-fuel-heavy industries
  • Sovereign downgrades
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Opportunities
  • Smart/automated grids
  • Electric vehicles
  • Logistics software
  • Sensors/monitors
  • Energy efficiency solutions
  • Insurance innovation

Founding member of net zero asset managers initiative

We intend to partner with asset owners on their decarbonization goals, in recognition of the potential impact of the low-carbon transition on security valuations. This opportunity enables us to deepen engagements with portfolio companies and enhance consultative partnerships with clients.

Climate action 100+ member

Our collaborative engagements complement our ongoing one-on-one dialogue with companies. We support the main asks of Climate Action 100+: accountability and oversight, TCFD-aligned disclosures, and science-based decarbonization targets.

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Representation and advocacy

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  • U.S. Commodity Futures Trading Commission: Our director of climate research sat on the CFTC’s Climate-Related Market Risk Subcommittee and contributed to its 2020 report “Managing Climate Risk in the U.S. Financial System
  • US Securities and Exchange Commission: As a follow-up to our communication in 2021, we expressed support for enhanced climate-related disclosures, including for greenhouse gas emissions, corporate location data, and climate-related governance in our 2022 letter to the SEC.
  • Disclosure frameworks:  We published P-ROCC 2.0, extending our 2019 Physical Risks of Climate Change framework. P- ROCC 2.0 advocates for disclosing the location of physical assets associated with company operations to help investors more fully assess climate-risk exposure.

Investor tools to facilitate climate integration

Extensive collaboration among our research teams has resulted in a set of innovative tools that enable our investors to integrate data on physical and transition risks into investment decision making.

Climate mapping software

Climate exposure risk application (CERA)

Our geospatial finance tool enables our investors to isolate or combine views of seven climate factors — heat, drought, floods, hurricanes, wildfires, water access, and sea-level rise. Overlaying this data onto geographic maps helps our investors identify “hot spots” that warrant further fundamental research.

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Mapping the impact of climate change 

In this three-minute video, we share the climate-exposure risk-analysis tool we have developed in partnership with Woodwell Climate Research Center. This software helps our investment teams track and assess physical climate risks facing capital-market assets around the world.

Investor team dashboards

Peer carbon-emissions dashboard

This dashboard facilitates comparison of companies against peers and average industry intensity. It includes the historical trend of Scopes 1 and 2 emissions intensity, as well as Scopes 1, 2, and 3 intensity figures, leveraging estimated Scope 3 datasets.

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Net-zero dashboard

This one-stop view is designed to help us monitor progress toward our net-zero milestones by combining climate-relevant data from company engagements (including holdings with science-based targets) and portfolio construction (including weighted-average carbon intensity).

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