Two of the world’s biggest institutional investors announced this week that they would be joining the Portfolio Decarbonization Coalition.
European financial services company Allianz, and Dutch pension giant ABP, revealed on Monday that they had joined the Portfolio Decarbonization Coalition (PDC), a group of investors committed to supporting the fight against climate change, which now includes 25 investors overseeing the gradual decarbonization of approximately $600 billion in Assets under Management.
“The success of the Portfolio Decarbonization Coalition is a clear signal that leading investors are recognizing the inherent risk that climate change poses to their portfolios,” said Achim Steiner, Executive Director of the United Nations Environment Programme and UN Under-Secretary-General. “By aligning their portfolios with the low-carbon economy, they are playing a key role in the climate action the world wants to see.”
Portfolio decarbonization, according to the PDC, is the integration of “carbon information into portfolio design, signalling that climate change, and the corporate response to it, is critical to shareholder value and investor interests going forward.”
“Climate change requires fast and collective action and continued commitment for decades to come,” said Oliver Bäte, Chief Executive Officer of Allianz SE. “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 longterm opportunities for our clients. Delaying action will be costly and will damage growth prospects.”
Allianz has currently committed €2.5 billion to renewable energy investment, and plans to double those investments in the future.
“We and all signatories of the PDC need an ambitious and reliable regulatory environment now to live up to our commitment to scaling back our financing of carbon-intensive businesses, and investing in renewables and low-carbon infrastructure,” added Oliver Bäte. “If this is fulfilled, then climate protection will not fail because of a lack of funding.”
Allianz announced last month in advance of the COP21 United Nations climate negotiations that it would begin divesting from coal in favor of investing in renewable energy. Specifically, Allianz stated that it would “stop financing coal-based business models,” such as companies that derive more than 30% of their revenue from coal mining, or generate over 30% of their energy from coal.
Meanwhile, in October, ABP revealed a new responsible investment policy which included a target of cutting 25% of its CO2-related investments from the overall share portfolio by 2020. Furthermore, the pension fund would double its investments “that contribute to a better and cleaner feature” from €29 billion to €58 billion by 2020.