Paris, June 1st 2017 – The financial sector is showing increasing awareness of climate change, with 60% to 70% of major institutional investors and global asset managers now publishing data on their exposure to climate risk. Yet less than a quarter of them are taking concrete action to decarbonise their investment portfolios. As a key driver in decarbonising the economy, the financial sector must transform itself through a low-carbon strategy that marries climate responsibility with financial efficiency. EcoAct and Forward Finance are joining forces to address this need, providing support for investors with their low-carbon strategies and responding to the new requirements of France’s energy transition law.
The Paris Agreement highlights the key role the financial sector has to play in keeping the increase in global temperatures below 2°C, by making “finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development”. The challenge exists not so much in identifying new sources of funding as in re-routing current flows, by backing the companies leading the way in ecological and energy transition, and supporting the worldwide economy’s transition towards the 2°C target.
The financial sector could even be a driving force in decarbonising the economy: indeed, investors cannot be unaware of the risk to financial assets from climate change, currently estimated at 2.5 trillion dollars for a 2.5°C rise in temperatures. On an international level, 60% of the 500 leading institutional investors (representing 27,000 billion dollars) and 70% of the 50 top global asset managers (managing assets worth 43,000 billion dollars on behalf of their clients) now provide information on the potential impact of climate change on their investments. Article 173-VI of the French energy transition law addresses this risk by requiring institutional investors to assess and disclose the potential impact of climate change on their investment portfolios (climate risk) and the impact their investments have on climate change (the portfolios’ carbon footprints). This creates a robust base on which to build a low-carbon strategy that reconciles climate responsibility and financial efficiency.
In response to these new requirements, EcoAct and Forward Finance are pooling their expertise to:
- estimate the carbon footprint of investment portfolios;
- assess climate and transition risks related to investment portfolios;
- design and implement strategies to decarbonise investment portfolios.
Forward Finance brings in-depth knowledge of the financial sector to complement EcoAct’s expertise in assessing carbon footprints and climate and transition risk. The partnership aims to provide investors with the essential tools to meet the requirements of article 173-VI of the energy transition law, and above all to support them in optimising their portfolios’ environmental performance, within the framework of a comprehensive low-carbon strategy.