An alliance of investor groups has released a new framework aimed at enabling institutional investors to step up action to help the fight against climate change and accelerate the transition to a net-zero economy.
An output of the Investor Agenda, which includes the Principles for Responsible Investment and the Institutional Investors Group on Climate Change (IIGCC), the “Investor Climate Action Plans (ICAPs) Expectations Ladder” provides investors with clear expectations for issuing and implementing comprehensive climate action plans.
This can include steps to support the goal of net-zero emissions by 2050, but the framework is intended to be for use by every institutional investor, regardless of how developed or not their approach to climate change is.
The framework summarises key climate actions investors can take in four interlocking areas: investment, corporate engagement, policy advocacy, and investor disclosure, with governance seen as cutting across all four areas.
Nick Robins, professor in practice for sustainable finance at the Grantham Research Institute on Climate Change and the Environment, said the ICAP approach provided a “really useful, structured way for investors to act on net-zero, physical risk and just transition” across the four areas.
According to the creators of the framework, investors can use it in several ways, including to assess their current approach to managing climate change risk and opportunity, and publish a standalone climate action plan.
It can also be used by investors to communicate their current and planned future approach on climate change to stakeholders.
Kirsten Spalding, senior program director, investor network at Ceres, said the framework was a follow-on from the net-zero commitments that investors were beginning to make, such as in the context of the Net-Zero Asset Owners Alliance or the IIGCC’s Paris-Aligned Investment Initiative.
“Those campaigns are made real when an investor articulates its climate action plan,” she told IPE. “This is not guidance on how to get to net-zero. It is a set of expectations about how every investor will articulate their own climate action plan.”
She told IPE she had previewed the framework with investors in her Ceres network – asset owners and asset managers – and that many had said it was very helpful.
The Investor Agenda hopes that at least 50% of all major investors will issue an ICAP or incorporate elements of the ‘Expectations Ladder’ into their plans, reports and strategies in the next year, and that all major invtors have an ICAP with net-zero targets in the next five years.
The framework can be found here.