Global Investor Coalition on Climate Change (GIC)

Information presented in this profile is for reference only. The Climate Action in Financial Institutions Initiative does not guarantee as to the exhaustiveness of this information and invites you to contact the Secretariat (contact@mainstreamingclimate.org) if you wish to propose any modifications.

By including this profile, the Initiative, its Supporting Institutions and the Secretariat do not endorse the activities described below nor the guidance and information provided in this profile.

Last updated: July 2018

Website: globalinvestorcoalition.org/

Contact:

Summary: Launched in 2012, the Global Investor Coalition on Climate Change (GIC) is a joint initiative of four regional groups that represent investors on climate change and the transition to a low carbon economy: AIGCC (Asia), Ceres (North America), IGCC (Australia/NZ) and IIGCC (Europe). In 2014, the Coalition developed the Global Investor Statement on Climate Change, which aims to ”[set] out the contribution that […] investors can make to increasing low carbon and climate resilient investments […] offer[ing] practical proposals on how [their] contribution may be accelerated and increased through appropriate government action”[1]. As of April 2018 it is signed by 409 investors representing more than US $24 trillion in assets. In addition to signing the statement, investors can also join different projects on climate policy, corporate engagement and investment practices, to which the GIC is contributing.

What are the objectives of the initiative?

“The GIC regional investor networks collaborate on joint international projects focused on climate policy, corporate engagement and investment practices, including investor statements on climate change. The GIC collaborates and coordinates investor engagement on climate change issues with key international organizations and institutions including the United Nations, the G20, OECD, the World Bank, IFC, regional development banks and a number of NGOs.”[2]

Who launched it? Who is participating?

Four regional groups, representing investors on the subject of climate change and the transition to a low carbon economy, jointly put in place the initiative. These groups are:

  • Asia Investor Group on Climate Change (AIGCC) (Asia), an “initiative to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing”[3].
  • Ceres (North America), “working with the most influential investors and companies to build leadership and drive solutions throughout the economy”[4].
  • Investor Group on Climate Change (IGCC) (Australia/NZ), “represent[ing] institutional investors”[5]
  • Institutional Investors Group on Climate Change (IIGCC) (Europe), a forum for institutional investors to “encourage public policies, investment practices, and corporate behavior that address long-term risks and opportunities associated with climate change”[6].

Why has this been put into place?

“The Global Investor Coalition on Climate Change advances global investor collaboration to improve investor practices, corporate actions and international policy responses to climate change.”[7] The Coalition was put in place to link the efforts of the four regional groups.

What are the main work streams/areas of work?

“By 2020, we aim to drive action in the following areas:

  • Policy: implementation of effective policies and regulations to achieve the Paris Agreement’s goals
  • Investment: transformation of investment practices to address climate risks, opportunities and re-allocation of capital to the low carbon economy
  • Corporate: acceleration of corporate action, accountability and disclosure on climate change risks and opportunities.”[8]

What are outcomes of the initiative linked with the 5 Principles?

The main outcome of the coalition is the Global Investor Statement on Climate Change, which is regularly updated since 2014 and currently signed by 409 investors representing more than US $24 trillion in assets under management.

The COP21 and the Paris Agreement were a central focus of the actions of the GIC. Members of the GIC “have been vocal in calling for meaningful carbon pricing and an ambitious climate agreement in Paris”[9]. Following the ratification of the Paris Agreement, the GIC addressed letters in 2016 and 2017 to the G7 and G20 nations to “stand by [the] Paris Agreement and drive its swift implementation”[10].

The coalition also set up tools, such as:

  • The Low Carbon Investment Registry: a “global public online database of low carbon and emissions reducing investments made by institutional investors”;
  • The Investor Platform on Climate Actions: “an online platform that identifies and records the wide range of actions on climate change being undertaken by the global investor community”. The four regional groups of the GIC launched this platform together with CDP, UNEP FI and the Principles for Responsible Investment (PRI).

Have intermediate or final reports / guidance been issued?

  • Climate Change Investment Solutions: A Guide for Asset Owners (2015) provides a “range of investment strategies and solutions to address the risks and opportunities associated with climate change. The guide is targeted at asset owners and more specifically at trustee boards and investment committees, but also contains insights for asset managers.”
  • The GIC also addresses public leaders in matters of climate change as, for instance, with their letter to governments of the G7 and G20 nations in 2017, urging them to stand by their commitments to the Paris Agreement.

Calendar and milestones

1 “implementation of effective policies and regulations to achieve the Paris Agreement’s goals”

2 “transformation of investment practices to address climate risks, opportunities and re-allocation of capital to the low carbon economy”

3 “acceleration of corporate action, accountability and disclosure on climate change risks and opportunities.”

Associated Supporting institutions of the Climate Action in Financial Institutions Initiative (signatories of the Global Investor Statement on Climate Change):

[1] www.iigcc.org/files/publication-files/11DecemberGISCC.pdf

[2] globalinvestorcoalition.org/faq/

[3] aigcc.net/

[4] www.ceres.org/about-us

[5] igcc.org.au/

[6] www.iigcc.org/about-us

[7] globalinvestorcoalition.org/

[8] globalinvestorcoalition.org/

[9] globalinvestorcoalition.org/author/admin/

[10] www.ceres.org/news-center/press-releases/over-200-global-investors-urge-g7-stand-paris-agreement-and-drive-its

[11] www.climateaction100.org/

Links with the 5 Voluntary Principles for Mainstreaming Climate Action

This section aims to support discussions on the implementation of the 5 voluntary Principles for Mainstreaming Climate Action. Information provided in this section is for reference only; the Climate Action in Financial Institutions Initiative, its Supporting Institutions and the Secretariat do not endorse the activities nor the guidance and information provided in this section.

The Global Investor Statement on Climate Change does not include recommendations for financial institutions to commit to climate strategies but the GIC addresses a number of areas related to Principle 1 in its Climate Change Investment Solutions: A Guide for Asset Owners:

“The aim of undertaking a strategic review is for asset owners to integrate climate change into their statement of investment beliefs and investment policies with actionable goals and targets. The next stage is to incorporate the beliefs and policies into asset allocation decision-making processes, to match the top down strategic priorities with bottom up implementation actions. This will involve measurement of the fund’s exposure to climate change risks and opportunities and consideration of how the portfolio could be changed to mitigate the risks and capture the opportunities, both within the existing asset allocation structure and through evolving the portfolio in the future.”

“A strong climate change investment policy will reflect the preceding components of the strategic review, namely evidence gathering, engagement with members and policy makers, formulation of beliefs and consideration of a fund’s investment constraints. The policy needs to make reference to the incorporation of climate change risks and opportunities across the portfolio […], including how it will be considered in decisions related to:

  • Strategic asset allocation.
  • Selection of new and monitoring of existing mandates.
  • Setting priorities and evaluation of new investment opportunities.
  • Reporting to members/stakeholders.”

The Global Investor Statement on Climate Change includes a commitment to: “Develop our capacity to assess the risks and opportunities presented by climate change and climate policy to our investment portfolios, and integrate, where appropriate, this information into our investment decisions.”

The Climate Change Investment Solutions: A Guide for Asset Owners includes recommendations on the assessment of transition risks:

“Some of the issues that asset owners might take into account when considering the risk of ‘stranded assets’ include:

  • The extent to which climate policy and technology advancements place fossil fuel assets at risk
  • Consumer trends that may impact on fossil fuel demand
  • The role of geopolitics and the possible impact on re-pricing fossil fuel assets
  • Assumptions around the utilization of ‘negative emission’ technologies (e.g. afforestation, agricultural soil carbon sequestration, bioenergy and carbon capture and storage, to name a few)
  • The role and interplay of asset values with commodity price movements
  • Consideration of the extent to which the market has priced in these uncertainties, the timing of when asset re-pricing may occur and the breakeven costs on new resource development projects”

“There are a number of possible actions that asset owners can take in evaluating the merit of reducing exposure to fossil fuel reserves:

[…]

  • Assess risk of retaining. Evaluate the potential financial risk of exposure to fossil fuel reserves through undertaking various scenarios testing under different policy and technology mix assumptions. New tools and research are emerging to support this assessment.
  • Assess risk of reducing or removing. Consider the potential costs of reducing or removing the exposure to the companies and assets that are linked to fossil fuel reserves. This will involve consideration of the implications for the portfolio’s tracking error to the benchmark and the impact on portfolio volatility and returns under different scenarios.”

The Climate Change Investment Solutions: A Guide for Asset Owners includes guidance for investors to document and improve their climate performance, with a set of actions to reduce the carbon intensity of existing assets and increase exposure to the low carbon economy, based on the following framework:

By signing the Global Investor Statement on Climate Change investors commit to:

  • “Continue to report on the actions [they] have taken and the progress we have made in addressing climate risk and investing in areas such as renewable energy, energy efficiency and climate change adaptation.”

The GIC set up the Low Carbon Investment Registry (“LCI Registry”), a global public online database of low carbon and emissions reducing investments made by institutional investors, which provides:

  • “A voluntary opportunity for investors to communicate their low carbon investments publicly;
  • A base of evidence in the form of examples of low carbon investments made by Investors globally; and
    A better understanding for Investors and their stakeholders of flows of private capital into low carbon investments.”