Climate Action Plans Expectation Ladder
Investor Agenda released the Investor Climate Action Plans Expectation Ladder, which aims to provide a comprehensive framework for addressing climate issues.
The Investor Agenda Group consists of seven founding organizations, namely the Asia Investor Group on Climate Change (AIGCC), the Carbon Disclosure Project (CDP), Ceres, and Investor Group on Climate Change (IGCC), Institutional Investors Group on Climate Change (IIGCC), United Nations Principles for Responsible Investment (PRI) and the United Nations Environment Program Finance Initiative (UNEP FI).
Related Post: Institutional Investors Releases Net Zero Transition Guidelines
Overview of Climate Action Plans Expectation Ladder
The Climate Action Plans Expectation Ladder proposed by Investor Agenda includes five aspects, namely investment, corporate engagement, policy advocacy, investor disclosure and governance. Each method contains a total of four ladders, which are suitable for investor groups at different stages.
Investor Agenda believes that the ladder can help investors assess the risks and opportunities of climate change and participate in the setting of climate transition plans. Investors can also incorporate ICAP elements into strategic decision-making and disclose progress on climate action to stakeholders.
Key Elements of Climate Action Plans Expectation Ladder
| Tier 4 | Tier 3 | Tier 2 | Tier 1 | ||
| Investment | Target Setting | Measure GHG Emissions | Set Emission Goals Aligned with Domestic Policy Goals | Set Emission Goals Aligned with 2050 Net Zero Target | Set Emission Goals Aligned with 2030 Net Zero Target |
| Strategy | Define Overall Objectives and Priorities | Define Decarbonization Strategy for High-emitting Sectors | Develop Decarbonization Strategy for One Asset Class | Support Real Economy Transition to Net Zero Emissions | |
| Risk Management | Undertake Portfolio Climate Risk Assessment and Monitor Climate Risks | Assess Whether and How Existing Products Support Net Zero Transition | Incorporate Scenario Analysis, Fundamental Analysis and Stress Testing | Develop Detailed Sector and Asset Level Scenario Analysis | |
| Asset Allocation | Invest in Companies that Aligns with 1.5℃ | Invest in Companies that Aligns with 1.5℃ | Incorporate Climate Change into Asset Allocation | Incorporate Climate Change into Asset Allocation | |
| Corporate Engagement | Engagement Initiatives | Join Engagement Initiatives and Promote Engagement with Companies | Participate in Engagement Initiatives | Take a Leading Role in Engagement Initiatives | Take a Leading Role in Engagement Initiatives |
| Bilateral Engagement | Engagement with Entities to Encourage Governance | Engagement with Entities to Encourage Governance | Ensure that Most Companies Have 1.5℃ Aligned Business | Ensure that All Companies Have 1.5℃ Aligned Business | |
| Corporate Escalation and Shareholder Engagement | Integrate Climate Change to Policy Statements | Establish Clear Escalation Strategy | Support Climate Resolution | File Climate Resolutions and Support ESG Resolutions | |
| Policy Advocacy | Investor Statements | Sign Collaborative Investor Statements for Paris Agreement | Sign Collaborative Investor Statements for 2050 Net Zero | Sign Collaborative Investor Statements for 2050 Net Zero | Sign Collaborative Investor Statements for 2050 Net Zero |
| Lobbying | Ensure that All Lobbying Activities Aligned with Paris Agreement | Establish a Clear Escalation Strategy for Trade Associations | Establish a Clear Escalation Strategy for Trade Associations | Ensure that Lobbying Activities by Corporations Are Publicly Disclosed | |
| Advocacy | Participation in Regional or Global Investor Network | Call on Governments and Regulators to Achieve Paris Agreement | Call on Governments and Regulators to Achieve Net Zero | Provide Strong Support and Play a Leading Role in Investor Network | |
| Investor Disclosure | Commitments, Objectives and Targets | Publish a Formal Statement Recognizing that Climate Change Presents Material Challenges | Publish Organizational and Portfolio Objectives/Targets on Climate Change and Report on Progress on an Annual Basis | Publish Organizational and Portfolio Objectives/Targets on Climate Change and Report on Progress on an Annual Basis | Publish a Climate Action Plan that Sets out Goals, Actions, and Accountability Mechanisms |
| Emissions Reporting | Publish a GHG Emissions Profile for at Least One Portfolio or Asset Class | Publish a GHG Emissions Profile for at Least One Portfolio or Asset Class | Publish a Detailed Account of the Analytical Methodology for Portfolio | Publish Reporting on Available Scope 1, 2 and 3 Emissions | |
| Portfolio Assessment | Publish an Assessment of the Risks and Opportunities Presented by Climate Change to the Investment Portfolio | Publish an Assessment of the Risks and Opportunities Presented by Climate Change to the Investment Portfolio | Publish Details of the Scenario Analysis and Results of Annual Screening and Monitoring of Portfolio | Publish Details of Action Taken as a Result of Portfolio Risk Assessment | |
| TCFD Alignment | Issue a Public Statement Supporting TCFD | Publish Partial Information on TCFD Recommendations in Financial Report | Publish Partial Information on TCFD Recommendations in Financial Report | Publish All Information on TCFD Recommendations in Financial Report | |
| Progress and Assessment Reporting | Assess Current Disclosures Against Guidance | Publish an Assessment of the Outcomes and Impacts Achieved from Corporate Engagement | Publish an Assessment of the Outcomes and Impacts Achieved from Policy Advocacy | Publish an Independent Third-party Assessment of the Investor’s Climate Change Reporting and Carbon Credits | |
| Governance | Policy | Develop Investment Beliefs to Manage Climate Risks | Ensure Climate Strategy Applies Fully Endorsed by the Board | Ensure Climate Strategy Applies to High-emitting Sectors | Ensure Climate Strategy Applies to High-emitting Sectors |
| Accountability | Define Roles and Responsibility foe the Board on Climate Change | Define Climate Change Responsibility for Board | Provide Adequate Resources and Training to the Board | Align Climate-related Metrics with Renumeration | |
| Planning and Evaluation | Develop a Climate Action Plan | Implement Review and Revise to Climate Action Plan | Ensure Climate Action Plan Aligns with Net Zero Targets | Allow External Stakeholders to Assess the Action Plan | |
| Skills Assessment | Build Climate Change Awareness at Board Level | Provide Regular Training for Board and other Staffs | Assess Climate Change Knowledge for Board, Senior Management, and Investment Team | Ensure All Staff Understand Climate Change | |
| Board Reporting | Identify a Role for the Board on Climate Actions | Ensure Board Regularly Review Risks and Opportunities | Report Regularly to the Board and Senior Management | Report Regularly to the Board and Senior Management |
Reference:
Investor Agenda Publish Investor Climate Action Plans Expectation Ladder
