Mar 09, 2011 - 10:37am
The ability of asset owners to build capability in the management of climate change risks and opportunities is becoming core to their business. Not only is it certain that this capability will be required over the long-term but it will become a determining factor in both the risk/return profile of the investment portfolio and also the fund‟s position in the market place. Our research shows that many funds are already building significant capability in this area and that many more are planning to do so. Additionally, many members are already expecting capability in this area.
As a result of this situation, large asset owners in particular such as superannuation funds, pension funds, sovereign funds and insurance companies are faced with three key challenges:
- Integration of climate change risks and opportunities into investment strategies;
- Restructuring the processes within the investment chain to better account for systemic, long-term risks; and
- Implementing systems to check that the processes in place are sufficient to manage climate change risks and opportunities on an ongoing basis.
The Climate Change Best Practice Methodology has been designed to guide asset owners through the process of building their capacity to respond to climate change.