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  • 1.  Methods and models to assess climate risks for your portfolios

    Posted 03-10-2024 10:10

    HI everyone! Tuesday this week I was the lucky one having attended the round table at Bloomberg discussing models and methods used by asset owners in their climate risk assessment.

    Thank you Phil Clements, CFA, CAIA, FDP and Nadia Humphreys for organising an excellent debate. The event was run under Chatham House Rules. Here are a few insights:

    The round table was kicked off by an organisation that conducted a survey on how members of pension funds and institutional investors perceive / view climate risk.  It was mentioned that this report would be published yesterday, I couldn't find it online yet. Once I do, I will share it here. Here are the insights from that report:

    • Out of 1K of respondents, staggering 80% want to see climate and nature actions reflected in their investments.
    • (Retail) investors are uncomfortable with their savings going to companies damaging the environment or treating workers badly
    • Answering the question of what industries would they like their savings to be invested, they mentioned renewable energy, healthcare and technology
    • 80% of respondents want their money to be invested in the UK
    • Do you support pensions to be invested in oil and gas? 15% - yes, 40% - want to withdraw their pensions out of oil and gas by 2040, 25% - dont know the impact
    • Respondents were given a choice of 2 statements: (a) "I am only interested in my investments making good returns" or (b) "I am only interested in my investments making an impact and returns". Until 2020 the slope went down on (a), then it started growing (cost of living crisis?)

      Participants of Bloomberg's round table, among them pension funds, regulators, consultancies and banks, passionately discussed the models and methods they are using in their climate risk assessment currently, challenges in making sense of all the data that is coming at them in different formats, standartisation prospects and problems, as well as using carbon pricing as a proxy.

      There were very interesting insights on "narrative" based disclosures and how helpful can the be (or not?) and why. We also heard ideas on how things are developing in the UK and what options are there for the Government to deliver on its "growth and green strategy" to create investable spaces to attract enough private capital.

      The round table was excellently moderated by Bloomberg's Nadia Humphrey, Head of Sustainable Finance Data Solutions.  So Lastly, would like to share interesting insights from Bloomberg:

    • 91% of FTSE companies have climate policy
    • 81% have formal net zero/ nature targets
    • 69% have formal transition plans
    • 53% these goals are tied to performance compensations

    Another colleague form Bloomberg presented on their climate risk assessments tools: NEO and TRACT which was very interesting. It uses ESG bottom up approach, focuses on product displacement (not GHG emission prices), propagates risks along the supply chains. May be we can hear from our Bloomberg members here more on those tools?

    What scenarios and models to assess climate risks for your portfolio do you use? And what are the top 3 challenges?


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    Aya Pariy
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  • 2.  RE: Methods and models to assess climate risks for your portfolios

    This message was posted by a user wishing to remain anonymous
    Posted 09-10-2024 09:57
    This post was removed


  • 3.  RE: Methods and models to assess climate risks for your portfolios

    Posted 31-10-2024 11:13
      |   view attached

    Hello Community!

    Here's that research and guide I was referring to in my post after the event at Bloomberg's offices earlier this month. UKSIF's guide on how to talk to your clients about sustainability. Quoting James Alexander from his LinkedIn post this morning:

    "Our findings show that fewer than half of the British public have heard of ESG Investing, and 72% of those that have heard of it are favourable to it. By contrast 80% of people have heard of Sustainable Investing or Responsible Investing and around 80% are favourable towards each. It stands to reason that fund literature should use terms that end-investors are familiar with and understand. We're suggesting that firms think about saying 'Sustainable' and 'Responsible' instead of 'ESG' to give a more plain-speaking characterisation of their aims and methods.

    Our research also reveals the very positive finding that people are supportive of the principles underlying ESG. Large majorities of respondents want to invest in companies that treat their workers fairly (67%). Respondents also favour companies that have sustainable operations (66%), make careful use of resources (64%) and are transparent about their social and environmental impact (75%). Respondents are also strongly in favour (88%) of full transparency from companies so that investors can make informed decisions."

    Here's the guide, also attached and downloadable from our Library.

    Share your thoughts on how and which terms you are using in your communication and how it helps?



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    Aya Pariy
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