IA calls for improvement in analysis of climate-related risks and opportunities

The Investment Association (IA) is calling for an increased focus on improving how firms conduct analysis of climate-related risks and opportunities.

In the Financing transition report, which outlines the IA’s approach to climate change and nature-related policy, the association lays down its green-transition pledges and policy asks.

The report also stresses the need for greater inclusion of nature and biodiversity-based commitments and a strengthened commitment to the International Sustainability Standards Board (ISSB).

As part of its work, the IA said it was in dialogue with policymakers and asset owners to ensure that the UK can remain a world-leading financial centre that contributes to a low-carbon and nature-positive transition.

“Our latest report underscores the UK investment management industry’s commitment to the goals set out in the Paris Agreement and the importance of clearly communicating the work our industry is doing to unlock the significant capital needed to support the green transition,” said Paul Scaping, public policy specialist at the IA.

“Investors have a fiduciary responsibility to act in the best interests of clients and beneficiaries to ensure long-term returns on savings and pensions. As part of this strategy, investors will consider the long-term risks and opportunities associated with climate change and other sustainability issues,” he added.

Green pledges

Key commitments and policy requests from the report include:

• supporting credible, comparable and decision-useful environmental disclosures, including ISSB standards and transition plans. The IA will encourage policymakers working at different stages of the investment chain to ensure standards are meeting the needs of both retail and institutional investors;
• fostering a dialogue between investment managers and asset owners on material environmental priorities, including nature and biodiversity;
• supporting the development of a range of approaches to scenario analysis to explore risks and opportunities in climate-related financial disclosures;
• advocating for consistency and certainty in real economy policy to catalyse green investment opportunities, with a particular focus on the sectors and technologies that are important to the energy transition in the UK and globally;
• improving public-private cooperation to enable greater use of blended finance and other models of transition finance.

The latest digital edition of IPE’s magazine is now available