Index aims to track carbon-intensive investments of world‘s largest 1,000 institutional investors
The global Asset Owners Disclosure Project (AODP) is considering the creation of a 'hypocrisy index' to name and shame large institutional investors that invest heavily in carbon-intensive industries while neglecting low-carbon opportunities.
The 2015 Global Climate Investment Index would measure the portfolios of large institutional investors that manage a combined total of more than $70 tn in assets and control more than half of all listed companies worldwide, according to John Hewson, chairman of the AODP and former head of Australia’s Liberal Party.
Investors to be targeted by the index invest about 55 percent of their funds in carbon-intensive industries and only about 2 percent in renewables and other low-carbon companies, Hewson, who refers to the index as a 'hypocrisy index,' says in a video posted on the AODP web site.
Late last month, the AODP asked 1,000 large asset owners worldwide to reveal how they govern the risks of climate change in a move meant to form the basis for the new index. The asset owners include more than 800 pension funds, about 80 insurance companies, 50 sovereign wealth funds and 30 foundations.
Hewson says the AODP aims to persuade the funds to increase the share of investment in low-carbon areas to about 6 percent of their total assets. The increase would spur a 'technological revolution' that would help create new companies and new technologies to combat climate change, he adds. The index would be paired with a social media platform designed to increase pressure on large funds to change their investment strategies.
'The rating will actually name and shame and embarrass some of these asset owners into changing their investment behavior,' Hewson says. 'The strategy is to work from the top down and the bottom up on these asset owners. The top down is to survey them and rate them. The bottom up is a social media platform called The Vital Few which empowers fund members and beneficiaries to contact their trustees and directors and ask them how they are managing climate risk.'
