London, 11 January 2017 - A coalition of 13 leading global asset owners and five major asset managers, representing more than $2 trillion in assets under management, have launched the Transition Pathway Initiative (TPI) - a pioneering global effort to help investors align portfolios with the transition to a low-carbon economy.
The launch took place this morning at the London Stock Exchange, marking a major milestone in investor collaboration on climate change.
Empowering investors with climate transparency
The TPI provides a free, publicly accessible online tool that evaluates how listed companies are managing the shift toward a low-carbon future. It measures both Management Quality (how prepared a company is for the energy transition) and Carbon Performance (how its emissions align with global climate goals).
Led by the Church of England’s National Investing Bodies and the Environment Agency Pension Fund, in partnership with the Grantham Research Institute at the London School of Economics (LSE), the tool uses data from FTSE Russell and is designed to support the requirements of the Task Force on Climate-related Financial Disclosures (TCFD).
A new benchmark for climate accountability
The TPI’s initial assessments cover the oil and gas and electric utilities sectors, with additional sectors to follow. Each company is evaluated on Management Quality (Levels 0–4) and Carbon Performance.
Early findings: momentum, but room to grow
- Nearly all companies (39 of 40) acknowledge climate change as a business issue.
- Electric utilities are slightly ahead of oil and gas producers in addressing climate risks.
- Most companies are building capacity, with board-level oversight and policies in place, but few have fully integrated climate strategy into operations.
- Gaps remain, particularly in setting quantitative emissions targets and obtaining independent verification of emissions data.
A collaboration across global investors
The founding members of the TPI include:
The Church Commissioners for England, Church of England Pensions Board, CBF Church of England Funds, Central Finance Board of the Methodist Church, Environment Agency Pension Fund, Local Authority Pension Fund Forum, RPMI Railpen, the Swedish National Pension Funds (AP1, AP3, AP4), USS, Wespath Benefits and Investments, and the West Midlands Pension Fund.
Supporting asset managers are Aviva Investors, BNP Paribas Investment Partners, Hermes Investment Management, PGGM, and Standard Life Investments. Hermes EOS will also use the TPI tool in its company engagement work. BNP Paribas Securities Services, a leading global custodian with $9 trillion in assets under custody, is also actively supporting the initiative.
About the Transition Pathway Initiative
The Transition Pathway Initiative (TPI) is a global, asset-owner-led initiative launched to evaluate how companies are preparing for the transition to a low-carbon economy. By providing transparent research and data, the TPI enables investors to manage climate-related risks and opportunities more effectively.
"The Transition Pathway Initiative is a tipping point for the market. The Initiative will identify companies that are aligned with the transition to the low-carbon economy and those most exposed to climate transition risk. There can be no doubt about the seriousness with which asset owners are taking account of this risks and it will be a key feature in the discussions we will be having with companies over the coming years" Adam Matthews, Co-Chair of the Initiative and Head of Engagement for the Church Commissioners and Church of England Pensions Board.
"Businesses should be able explain to investors how they plan to manage climate change risks, invest and innovate on the way to the zero-carbon economy of the future. With the launch of the Transition Pathway Initiative, asset owners from around the world are sending a strong signal that portfolios will align in the future with companies that are taking the transition to a low carbon economy seriously" Emma Howard Boyd, Chair of the Environment Agency
"The TPI brings transition risk to life for asset owners and asset managers. As well as allowing investors to objectively compare the progress of companies towards a low-carbon economy, the tool highlights the work governments still need to do to align public policy to the two-degree target agreed in Paris" Professor Simon Dietz, Co-Director of the Grantham Research Institute at the LSE.
"The launch of the TPI highlights the growing momentum among asset owners to consider the economic implications of the transition towards a low-carbon economy into their stewardship and investment processes. FTSE Russell has long been a pioneer in ESG, and sustainable investing and we are delighted to have been chosen by the TPI as the data and analytics partner for this exciting initiative" Mark Makepeace, CEO of FTSE Russell.
"BNP Paribas Investment Partners is very pleased to be among the asset managers that actively support the Transition Pathway Initiative. It is important for asset managers to partner with asset owners, as by doing so we can send a unified message to companies regarding our expectations of them as they position themselves for the transition to a low-carbon economy. It also sends a clear signal to the wider world that we are actively engaging with companies to help them to work towards greater action, as well as disclosure of transition risks, in order that their shareholders can make fully informed investment decisions" Frédéric Janbon, CEO of BNP Paribas Investment Partners.
"The Transition Pathway Initiative is an important step forward in the necessary route towards lower carbon intensity. A large gap currently exists between governmental commitments on emissions made in Paris in 2015 and the preparations of companies to help meet those challenges. The TPI will provide a useful tool for us as investors to gauge how effectively companies are addressing the sustainability of their business plans" Euan Stirling, Head of Stewardship and ESG Investment, Standard Life Investments.
"The Transition Pathway Initiative is a significant intervention by church asset owners and others. It will enable us to have a new conversation with companies based on a rigorous understanding of where they sit on the transition to a low- carbon economy, and to follow through on the commitments we have made in our climate change policy" Sir Andreas Whittam Smith, First Church Estates Commissioner of the Church Commissioners for England.
"As a long-term investor USS wants to be able to assess how companies are managing climate change and the risk it poses to their business. The TPI provides a tool for us to do this and as a result will allow us to make better informed investment decisions improving financial returns for our members and beneficiaries" Elizabeth Fernando, Head of Equities at USS.
"IIGCC welcomes the launch of the Transition Pathway Initiative. As investors seek to help drive the changes required to implement the Paris Agreement, it is great to see new tools emerging that asset owners and managers can employ to assess climate transition risk through benchmarking corporate climate disclosure and evaluating how well a company is positioning itself as part of the low carbon transition" Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change.
