ASSESS GLOBAL RESPONSIBLE INVESTMENTS
RESPOND (Resilient and Sustainable Portfolios that Protect Nature and Drive Decarbonisation) is an interactive online tool to help asset managers improve portfolio resilience and alignment with a low carbon and sustainable future through the application of science-based approaches to responsible investing.
Identify key improvement areas to stay competitive, resilient and relevant in a resource-constrained, low-carbon nature-positive future.
ENVIRONMENTAL & SOCIAL THREATS
The world faces the twin threats of climate change and nature degradation. Each causes and exacerbates the other in a vicious cycle. These planetary emergencies manifest as environmental and social (E&S) threats that create material risks to both society and the economy.
These risks can negatively impact companies’ bottom lines and valuations. Acute physical risks (e.g. floods) disrupt supply chains, while chronic physical risks (like temperature rise) destroy productivity. Regulatory and legal risks arise from increasing incidence of stricter E&S regulations and the ensuing liability of not adhering to such laws. Market risk from shifting supply and demand (toward sustainably sourced products) will leave companies that do not respond in time at a competitive disadvantage. Reputational risks from E&S controversies can lead to depressed demand for a company’s products or loss of the social licence to operate in a particular market.
The finance sector is well positioned to safeguard against these risks. Whether by choice or by law, financiers can guide companies of all sizes and in all industries along a transition to a more sustainable economy. By managing exposure to E&S risks and engaging clients to develop more resilient business models, financial institutions can shift capital flows toward sustainable growth and drive positive impact in the real economy – and therefore in society as a whole. In doing so, financial institutions stand to gain from a wealth of new opportunities in providing sustainable products and solutions.
RESPOND
AT A GLANCE
The Resilient and Sustainable Portfolios that Protect Nature and Drive Decarbonisation tool shows year-on-year changes and highlights progression or regression in asset managers performance on the integration of environmental and social (E&S) considerations in their corporate strategy and decision-making processes.
40
ASSET MANAGERS Assessed
4
Regions (Europe,Japan, China, Asia (Ex. Japan & China)
6
Assessment Pillars
14
Indicators
81
Sub-Indicators
2
Sector Frameworks
NEW IN 2022
In 2022, the Energy Transition (ET) and seafood Frameworks were added to the RESPOND analysis. The ET framework was added to assess the extent to which the current panel of asset managers assessed under RESPOND have aligned their energy sector investment practices to the recommended trajectories and timelines for a 1.5 degree pathway.
The seafood sector’s growing importance as a key source of protein, paired with the growing ESG challenges it faces, position it as a key source of both potential financial risk and opportunity. A pilot assessment for select asset managers with seafood-related portfolios has been conducted and will be released in the Sector and Issues in 2023.
WHO SHOULD USE THIS TOOL
ASSET MANAGERS
- Review current RI capabilities and TCFD/PRI alignment and identify areas for improvement
- Demonstrate link between investment decisions and engagement activities of portfolio companies to adopt more sustainable operating practices
- Benchmark against RI leaders and learn from their best practices
Asset owners
- Complement consultant analyses and gain a holistic perspective when evaluating external managers and awarding mandates
- Engage with external managers to enhance their RI capabilities (e.g. through incorporating science-based criteria into investment portfolio decisions to maximize portfolio resilience to climate and other ESG risks)
- Analyse ESG impacts related to the deployment of their capital
- Improve internal ESG approaches in order to meet the emerging, higher standards expected of the regulators and beneficiaries
REGULATORS
- Monitor and engage asset managers to improve their management of climate and other ESG risks, thereby increasing the finance sector’s resilience and better protecting beneficiaries
- Improve capital market transparency on sustainability by encouraging asset managers to disclose according to the framework
- Identify ways to increase the eligibility and competitiveness of their asset management industries to better respond to asset owner mandates