- Invesco as a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) launches its inaugural Climate Change Report
- Invesco introduces its climate scenario analysis to address climate change at the investment level
- Report highlights the impact of Invesco’s approach to climate change on its operations and investment
- Invesco aims to integrate ESG, particularly climate change, in all investment products and solutions by 2023
Managing more than US$1 trillion of diverse assets for its clients around the globe, Invesco is analysing the impact of climate change on its holdings and operations. Invesco published today its Climate Change Report*, the first comprehensive assessment of the global asset manager’s ESG strategies in line with the TCFD (Task Force on Climate-related Financial Disclosures) framework. Reporting of this type is expected to become the benchmark with the likelihood that TCFD’s framework will become a globally adopted standard in the coming months.
The report also sets out Invesco’s assessment of a significant part of its listed equities and corporate fixed income holdings concerning emissions intensity, temperature alignment and climate scenario analysis. The focus on the most relevant portfolios by regional composition and size puts Invesco among the first leading investment managers to conduct scenario analysis of this type.
In the forward to the report, Martin L. Flanagan, President and CEO, Invesco, said:
“This inaugural report describes our approach to assessing and managing climate risks across our investment process and business operations. We see our TCFD reporting as a journey, one that starts with this first Invesco Climate Change Report, defining March 2019 – March 2020 as our base year and setting our ambitions for the future.”
Introducing the inaugural report Cathrine De Coninck-Lopez, Invesco’s Global Head of ESG, said:
“Tackling the climate emergency is arguably everyone’s responsibility. As an investment manager the development of a corporate understanding of the effects of climate change on business, strategy, and financial performance is highly challenging. However, we are committed to meeting that challenge as a business and for our customers. Investors are part of the solution to climate change through supporting and influencing companies that are adapting, transitioning, and allocating capital towards future- proofing our planet.
As a business we are passionate and driven in our commitment to deliver lasting change. This is important to our clients and this report sets out how we are tackling those challenges.”
The report highlights Invesco’s approach to governance and strategy, ensuring that ESG principles are being integrated across the business, engagement with clients, approach to advocacy and investment solutions. Invesco has undertaken an assessment of climate change at the operational level, including metrics covering operational, investment and regulatory risk, and concluding with specific targets going forward.
Also revealed in the report are the results of a quantitative climate scenario analysis of the interaction between climate change and Invesco’s holdings of equity and bond investments under multiple emissions/temperature rise scenarios.
Climate leadership requires collective action
As part of a commitment to leading the standard, Invesco has aligned itself to several global organisations dedicated to driving the climate change agenda.
Invesco is one of a handful of global investment managers working within the One Planet Asset Management Initiative with the goal to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios. This is done through the sharing of responsible investment practices with the Sovereign Wealth Fund members of the One Planet Sovereign Initiative and the publication of relevant research.
Invesco is also a partner of the Climate Bond Initiative, which helps grow a market of green and climate bonds through outreach and education projects centred on growing robust and sustainable green bond markets that contribute to climate action and low carbon investment.
Invesco is a signatory to Climate Action 100+ , which is a global investor initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change. The firm has also joined the IIGCC (Institutional Investor Group for Climate Change), and the CCRI (Coalition for Climate Resilient Infrastructures), and has been part of a select group of asset managers and industry players that has helped create the guidance published by the Climate Financial Risk Forum chaired by the Financial Conduct and Prudential Regulatory Authority in the UK.
Why climate scenarios are important
Understanding the implications of future climate risk alongside the current emissions intensity and temperature alignment of investments is a critical part of this report. The scenario analysis pilot project informs Invesco’s thinking as it seeks to develop a more comprehensive climate strategy going forward. This work will help Invesco’s investment and risk teams to build forward-looking climate analytical tools, which it is hoped will be the pathway to be able to integrate ESG, particularly climate concerns, in all investment products and solutions by 2023.
Maria Lombardo, Invesco’s Head of ESG Climate Strategies EMEA, said:
“Our scenario analysis exercise offered evidence and clear directions to address climate change risks and opportunities for our clients and their investments.”
Commenting on what this means for investors in the Middle East, Zainab Kufaishi, Head of Middle East and Africa at Invesco, said:
“At Invesco we believe the issues of climate change should be top of the agenda for us as a society and for our clients. The responsible investing evolution has gained momentum in the Middle East, and the actions and decisions of influential investors in this region are increasingly shaping the future of companies. ESG integration is now widely seen as part of our fiduciary duty. Though the region is still in its initial phase when it comes to adopting such strategies into portfolios, investors understand that portfolio performance can benefit if investment decisions consider financial risk factors associated with ESG topics. Our recent IGSAMS study of sovereign asset managers revealed that climate change and the rise of natural disasters is significant concern for investors in this region, causing them to adopt investment strategies that implement climate-related risk into the wider investment process. Multiple sovereign entities across the region have already begun to prioritize these issues through organisational-level commitments and government-sponsored initiatives.”
Invesco is committed to reporting annually on its climate change strategies, and the impact this is having on its clients, employees, key stakeholders, and the global business.
Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. NYSE: IVZ; www.invesco.com.
*About the Climate Change Report [insert relevant URL and/or investor information]
Invesco’s existing climate change related relationships:
Invesco is a member of the Institutional Investors Group on Climate Change (IIGCC). The IIGCC is a European body facilitating investor collaboration on climate change, effectively serving as a conduit for investors to advocate a prosperous, low carbon future. The organization is part of a global network of organizations that serve as the secretariats for Climate Action 100+, of which Invesco is a leading member. It helps to define public policies, investment practices and corporate behaviours that can address the long-term risks and opportunities associated with climate change.
Invesco is a member of One Planet Asset Management Initiative, an initiative supported by leading asset manager in support of the Sovereign Wealth Funds members of the One Planet Sovereign Wealth fund (OPSWF) in their implementation of the Framework. The group representing more than 15tr US$ of asset, is committed to actively collaborate within the OPSWF Framework and to engage with other key actors, including standard setters, regulators and our broader industry to further the objectives set out in the Framework. The goal is to advance the understanding of the implications of climate-related risks and opportunities within long-term investment portfolios through sharing of our investment practices with the members of the OPSWF and publication of relevant research. https://oneplanetswfs.org/
Invesco is a member of the Climate Bond Initiative (CBI). Invesco became a partner of the Climate Bond Initiative set up to help grow a market of green and climate bonds through outreach and education projects centred on growing robust and sustainable green bond markets that contribute to climate action and low carbon investment. Partners assist in developing initiatives to grow investment in climate finance solutions, participate in different market development committees & help define policy agendas for sector, country & sub-national green bond development programmes. Besides the Global ESG team, Invesco is represented in the partnership by the Global Invesco Fixed Income and Invesco Indexing team. “In our work to offer indexes that promote a greener world, Invesco Indexing is excited to partner with CBI, who is committed to helping identify sustainable investments worldwide and bringing the importance of sustainable investing to investors” – Ken Masse, Client Engagement Director. “It’s great to have access to CBI’s in depth analysis as well as be able to tap into their expertise in the sustainability bond market. Knowing that their methodology is closely linked to the EU taxonomy is also particularly important as we evolve our fundamental research and client solutions to consider issuers and issuances through this lens.”- Nikki Gwilliam-Beeharee, Director of ESG Research, Invesco.
Invesco is also a member of the World Economic Forum Coalition for Climate Resilient Investment (CCRI). The CCRI is a working group which aims to transform investment by integrating climate risks into decision-making, driving a shift toward a more
climate-resilient economy for all countries. Invesco is a leading real estate investor, and participation in the CCRI facilitates better integration of climate change assessments into existing investments, as well as helping to direct future investments into climate change-resilient infrastructure.
Invesco also took active part to the Climate Financial Risk Forum (CFRF) chaired by the Financial Conduct Authority and Prudential Regulation Authority that resulted in the publication of a Climate Risk guide
for financial practitioners. Our leadership role in the forum helped us to stay ahead of regulation and being part of shaping the solution that is developed for the industry.
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