Two of the world's biggest institutional investors join the Portfolio Decarbonisation Coalition
Institutional investment giants Allianz and ABP have joined a group of investors committed to tackling climate change by decarbonising their assets and integrating carbon information into portfolio designs.
The news was announced yesterday at a fringe event during the UN climate change conference in Paris. The group, dubbed the Portfolio Decarbonisation Coalition (PDC), now consists of 25 investors with $600bn under management - far more than the Coalition's original target of $100bn.
PDC members have all committed to withdraw capital from carbon-intensive companies, projects and technologies in each sector, reinvesting the money into carbon-efficient assets. They have also committed to mapping the carbon footprint of their assets and incorporating this information into their portfolio structures.
Oliver Bäte, chief executive of Allianz, said climate change requires collective action and continued commitment. "Our knowledge of risk, our financial resilience and long-term investment horizons enable us to offer effective support for climate protection while making the most out of long-term opportunities for our clients," he said in a statement. "Delaying action will be costly and will damage growth prospects."
The news follows Allianz's pledge late last month to move €4bn from coal assets into wind power as part of its ambition to divest completely from the dirtiest fossil fuels.
Corien Wortmann-Kool, chair ABP's board of trustees, said providing investment managers with carbon budgets alongside risk and return budgets will allow the investor to cut its carbon footprint while delivering good returns for its clients.
The success of the PDC project is one of a growing number of signals that climate change is becoming critical to shareholder interests. Last week, Mark Carney, chair of the Bank of England and the global Financial Stability Board, announced the creation of a new task force on climate-related financial disclosures in a move designed to help investors better assess the climate risk faced by listed companies.
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