Glenview, IL—Wespath Benefits and Investments has joined 13 major global investors representing over $2.4 trillion (£2 trillion) in assets under management in launching the Transition Pathway Initiative (TPI) in London today at the opening of the London Stock Exchange. The TPI will assess how individual companies are positioning themselves for the transition to a low-carbon economy. Through a public, transparent, online tool designed to assess companies’ progress on this transition, TPI will enable investors to better understand how this shift could affect their portfolios.
The TPI has been led by the Church of England’s National Investing Bodies and the UK’s Environment Agency Pension Fund in partnership with the Grantham Research Institute at the London School of Economics. Data has been provided by FTSE Russell.
Preliminary assessments released today include the oil and gas and electricity utilities sectors. As part of a phased rollout, management quality and carbon performance assessments of additional sectors and individual companies will follow in the coming months. The assessment tool TPI has designed supports the requirements of the Task Force on Climate-Related Financial Disclosures (TCFD), comparing future projected emissions to the two-degree Celsius target and other current public policy commitments.
Almost all 40 companies assessed are at least acknowledging climate change as a business issue (39 of 40). However, few companies are at the level of strategic assessment (level 4), meaning most can improve.
Electricity utilities have progressed marginally more than oil and gas producers.
The typical company is building capacity (15 of 40 are at level 2), meaning it explicitly recognizes climate change as a significant issue for the business, has a policy commitment to action, has set some form of energy or greenhouse gas emissions target, and discloses its operational greenhouse gas emissions.
The majority of companies also have board oversight of climate change policy (a factor in reaching level 3; 28 of 40), and incorporate ESG issues into executive remuneration (a factor in reaching level 4; 34 of 40).
The most common factors hindering progress are not having set quantitative targets for reducing operational greenhouse gas emissions (26 of 40), and not having had operational emissions data verified (22 of 40).