The Transition Pathway Initiative, which measures the pace of corporate decarbonization and is backed by investors including BlackRock Inc. that oversee a combined $40 trillion of assets, is ramping up efforts to measure companies’ preparedness for the energy transition.
The TPI Global Climate Transition Centre will open early next year and will provide free publicly available data on how 10,000 publicly-traded companies are aligning with a net-zero pathway, up from the roughly 400 covered by TPI today, according to a statement Tuesday. The TPI Centre, which will be based at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, also will scrutinize the decarbonization efforts of corporate and sovereign bond issuers.
While a growing number of companies and financial institutions have committed to net-zero emissions across their operations and supply chains by 2050, few have mapped out in detail how they plan to reach that goal, leaving investors unsure how they will deliver on their own promises of net-zero investment portfolios. Understanding companies’ level of ambition and their speed of travel towards net zero should enable investors and bankers to allocate capital more intelligently.
Adam Matthews, chair of TPI and chief responsible investment officer at the Church of England Pensions Board, said the TPI Centre will empower “all investors to take action and judge climate performance through the same lens.” It will be “a critical component of the post Glasgow COP financial infrastructure, enabling investors to deliver on their commitments,” he said, referring to the much-anticipated United Nations climate change conference to take place in Scotland’s most populous city later this month.
“It’s an almost ecology in itself in the finance sector: The change comes through millions of individual decisions, not a single process, and therefore you have to think about what are the nudges that will change things,” Archbishop of Canterbury Justin Welby, the most senior cleric in the Church of England, said Tuesday in an interview at the unveiling of the TPI Centre at the London Stock Exchange. “And this is one heck of a big nudge; it’s more of a very very large push.”
Almost half of global assets under management are now overseen by investors that have pledged to reach net zero and the TPI Centre can help with aligning portfolios of equities, corporate debt and sovereign bonds to achieve that target, according to the statement.
The TPI Centre is directly supported by asset owners, fund managers and TPI’s key partners the London School of Economics and Political Science and London Stock Exchange Group. BlackRock, the world’s largest money manager, said in the statement it would join TPI as a supporter, taking TPI’s list of supporters to more than 110 funds with $40 trillion in assets under management and advisement.
“It is BlackRock’s investment conviction that climate risk is investment risk,” said Sandy Boss, global head of BlackRock Investment Stewardship. “We consistently hear from investors around the world on the need for quality data to inform decision making, and so we are pleased to support TPI as it scales its analysis to provide valuable input.”((Updates with comment from London Stock Exchange Archbishop of Canterbury Justin Welby in tktk paragraph.))
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