In the last 15 years, CDP has revolutionized how companies understand and manage climate-related risk by harnessing investor power.
With today’s launch of Climetrics, the world’s first climate impact rating for investment funds, we have added a further tool to empower investors to act. Shining the light of transparency on the €3 trillion European fund market, this new rating enables all financial actors to integrate climate into their investment decisions.
There is fast-growing demand for climate-conscious investment. Assets managed under responsible investment strategies have grown 25% since 2014. $60trn of assets are signed up to the UN-supported Principles for Responsible Investment. The green bond market has grown from $11bn to around $200bn in less than 4 years.
But markets are powered by high-quality, reliable information, and until Climetrics there has not been an easy, cost-effective way for investors to judge funds based on their climate impact.
Having shed a light on the climate management practices of close to 6,000 companies, and worked with more than 280 multinationals to set Science Based Targets, CDP now looks to foster a similar culture of transparency in the equity fund market.
Why is Climetrics the missing link?
Climetrics makes climate impact understandable and comparable at a glance, rating more than 2,500 funds for sale in Europe - covering €2 trillion of assets – with the overall results made public on climetrics-rating.org.
Using a methodology that accounts for climate impact at a portfolio, asset manager and fund strategy level, only Climetrics applies a special magnifying glass to highlight a fund’s exposure to the highest-impact industries, and only Climetrics is fully transparent.
Through this unprecedented transparency, we are excited by Climetrics’ potential to move the needle in incentivizing investors, asset managers and companies to contribute to the low-carbon transition.
Every investor - from the 18-year old opening her first savings account to the institutional investor handling millions - may now integrate climate into his decision, while asset managers may now easily differentiate their fund products and create new low-carbon offers.
We see Climetrics as a missing link between individual investment choices and the global challenge of climate change. This is the reason why Climetrics is so significant for CDP; part of its toolkit to focus the market on taking the urgent action needed to build a truly sustainable economy.
High-quality information will drive our low-carbon transformation
Coming just one week after the launch of the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which will mainstream climate information into financial reports, Climetrics too will provide investors with the high-quality information needed to manage environmental risks and opportunities and ultimately unlock finance to drive the low-carbon transition.
With the Paris Agreement demanding some major changes in both policy and markets, there is irreversible momentum on climate change but we need to act quickly. To reach a tipping point we need innovation like this that can shift capital towards more carbon efficient companies with good climate management practices.
We need markets to continue to play their part, and in 10 years from now I hope we’ll be celebrating the role fund investors had to play in building a sustainable economy that works for people and planet in the long-term.