Investment managers have a responsibility to act in the best interests of clients and a major part of this is the generation of long-term returns. This requires the consideration of material risks, which include climate-related risks, in investment processes. As climate change is one of the greatest systemic risks that we are now facing – addressing this is therefore among the most important actions the industry can take to act in the best interests of savers and investors.  

The position paper includes seven commitments from the industry and three asks of government (summary below – click to view the full paper):  

• Commitments: 
  1. Engagement with investee companies on climate-related disclosures  
  2. Working with pension fund clients to help them meet their climate-related disclosure requirements 
  3. Development of Investment managers’ TCFD disclosures 
  4. Support improvement of sustainability-related disclosures at fund-level 
  5. Link with advanced initiatives to support Disclosure of Paris-Alignment of Portfolios 
  6. Supporting the FCA-PRA Climate Financial Risk Forum work 
  7. Support creation of investable opportunities 

• Asks: 
  1. TCFD reporting by large private companies - Large private companies should be required to report in line with TCFD and the UK government should amend company law to require all large UK incorporated companies (public and private) to report in line with TCFD. 
  2. Green gilts We welcome UK government’s announcement that it will issue its first sovereign green bond in 2021, subject to market conditions. We ask that the Government make good on this intention and stand ready to assist to help see this plan to fruition. The issuing of a sovereign instrument that attracts private sector capital into green recovery and growth will be an important signal and, crucially, will demonstrate the UK government’s commitment to its 2050 net zero target, clean growth and a green economy. 
  3. UK government to facilitate sector-specific pathways to transition: We ask to work together with UK government to ensure the requisite policy interventions are brought in to facilitate the transition to Net Zero for different sectors. 

Chris Cummings, CEO of the Investment Association said: “Climate change is one of the most pressing issues of our time and an unavoidable factor in the investment process. As stewards of the economy, investment managers have an important role to play in guiding the companies we invest in towards a more sustainable future. This is not only in the best interests of our planet, but also for savers and investors seeking long-term returns from their investments.  

“The UK is now at critical juncture as we look to honour our commitment to reaching net zero by 2050. Our industry will stand together with government, businesses, and our clients to realise this change, and ensure the UK remains a global leader in sustainable finance.”