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Our Blog

Tackling climate change

08 November 2016
Agreement, change, climate, disclosure, IGCC, Paris
As a responsible investment manager, AMP Capital is actively involved in a variety of industry initiatives around climate change. One example of this was the Investor Group on Climate Change (IGCC) and Carbon Disclosure Project (CDP) roundtable I attended recently which discussed the ‘Future of Climate Disclosure’.
 
The IGCC is a collaboration of Australian and New Zealand investors focusing on the impact that climate change has on the financial value of investments. It aims to encourage government policies and investment practices that address the risks and opportunities of climate change. AMP Capital was a founding member of the IGCC and our Head of ESG Research, Dr Ian Woods, is the Deputy Chair.
 
The IGCC was one of a number of global investor groups which called on world leaders to not only sign but accede to the Paris Agreement on Climate Change and bring it into force as a matter of urgency. The Paris Agreement marked a turning point for global climate change policy with 195 countries adopting the first-ever universal, legally binding global climate deal. By agreeing to limit global temperature rises to well below 2°C, governments have signalled an end to the fossil fuel era and committed to transforming the global economy. While the Agreement highlights the commitment of countries to address climate change, it also reinforced the need for both investors and companies to assess, communicate and manage their climate change risks.
 
One of the key take outs from the roundtable was that the Paris Agreement was unprecedented in terms of the speed of its ratification by the international community. Never before has an important agreement been ratified so quickly and so widely. This is a strong testament to the political attention and approval that it has received worldwide.
 
Although companies and governments are starting to realise the benefits of a low-carbon world, companies first need to measure their emissions, then work out how to reduce them. Disclosure by companies is a critical first step to enable investors to assess climate change risk. AMP Capital is a member of the CDP, formerly the Carbon Disclosure Project, a global reporting and disclosure system that enables cities, states and regions to measure and manage their environmental impacts. Investors and purchasers can then access the environmental information and insights to use in financial decisions.
 
From AMP Capital’s perspective, companies need to provide appropriate disclosure to demonstrate that they are assessing and managing their climate change risks; enabling investors to do likewise. Given the issue of climate change and disclosure by companies is something that has been on investors’ agendas for more than 10 years, we believe the time has come that companies adequately report on their emissions.
 
Significant progress has been made over the past few years, and the Paris Agreement marked a tipping point by reaching an unprecedented alignment of parties. The annual UN climate conference which is taking place in Marrakech from 7 to 18 November 2016, will be the first of a series of meetings focusing on the implementation of the Paris Agreement and how to advance international action to combat climate change. The task (and the challenge) now is to shift from agreement to mobilising resources towards real climate change action.
 
For further information refer to the insights papers in the responsible investment section of our website, and visit  www.igcc.org.au and www.cdp.net 
 
This blog post has been prepared to provide general information and does not constitute 'financial advice' for the purposes of the Financial Advisors Act 2008 (Act). An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.

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