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Climate change and institutional investment


In context

Addressing climate change is a responsibility we all share – as individuals and as organisations. This is the ‘Climate Decade’ where we must act decisively, boldly and together.

This is the ‘Climate Decade’ where we must act decisively, boldly and together.

There is tremendous and growing risk in the destruction brought about by climate change, but also great opportunity in the transition possible to a greener and fairer world.

We firmly believe that sustainable investment is central to successful long-term investor outcomes. In particular, climate change, and a just transition to net zero carbon emissions, is a systemic and urgent global challenge which necessitates specific risk management, opportunity identification and collective action.

We have identified climate change as a critical and systemic priority, given the risks it presents to our clients’ investments, the ongoing resilience of the savings universe, and the planet as a whole.

Our approach combines deep research, proprietary portfolio management tools and analysis, effective stewardship and industry collaboration. We look to deliver this via practical solutions tailored to individual client contexts. This forms part of Willis Towers Watson Climate Quantified™, supporting corporate, finance and public sector clients to identify, assess and act upon physical, transition and liability risks arising from regulatory, investor, consumer, employee and operating pressures.


Solutions

Institutional investors can confront the risks and opportunities of climate change in many ways. Our capabilities in this area are outlined below:

  1. 01

    Carbon journey planning

    setting portfolio decarbonisation pathways and climate solution allocation targets

  2. 02

    Climate scenario analysis

    applying multiple climate pathways to stress test asset portfolios and liabilities, assess resilience and identify strategic actions

  3. 03

    Physical climate risk mapping

    using leading reinsurance tools to analyse impacts of extreme and changing weather patterns, with a focus on real assets

  4. 04

    Thematic risk and opportunity exposure

    identifying areas of risks and opportunities to best position portfolios for long-term trends

  5. 05

    Portfolio reporting and analysis

    detailed portfolio information on material sustainability and climate risks and opportunities

  6. 06

    Fund solutions

    embedding the best of our climate research, risk management and idea generation

  7. 07

    Exclusions

    establishing policies with practical advice for implementation

  8. 08

    TCFD

    enhanced reporting as part of a strategic approach to managing climate risk and opportunities

  9. 09

    Benchmarking

    assessment of approach and activities relative to peers and global best practice standards

  10. 10

    Mission, beliefs and purpose

    setting and socialising the foundations of a strategic approach to climate


Compelling climate investments

Improving investment outcomes – better return and lower risk continues to be the mainstay in every decision we make. The following examples are compelling investments in its own right, supported by long-term sustainability trends, but as a set these investments benefit further from having attractive environmental impacts.

We have made as part of our secure income and multi-asset pooled fund solutions. Some of these investments were also made by our segregated delegated accounts, and indeed in some cases also by our advisory clients.

Unlock More

Read more: Greenhouses and Hydropower

Advance greenhouses for more sustainable agriculture

  • Provided project finance for advanced greenhouses in North America, with numerous environmental benefits including improved crop yields and reduced water consumption, soil erosion, use of chemicals and transportation
  • Specialist manager focused on technology-driven agriculture in an emerging sector of controlled food production

Unlocking hydropower energy in Scotland

  • Hydropower is the largest global source of renewable energy
  • Coinvested in a Scottish hydropower development working with a specialist mid-market European infrastructure manager
  • Japanese and UK solar farms
  • Sustainable agriculture via controlled environment advanced greenhouses
  • Hydropower plants located in Scotland
  • The UK’s largest Energy from Waste facility located on the Thames
  • Re-insurance strategies to enhance corporate resilience for climate disruption and extreme weather
  • Alternative credit financing low-to-moderate income families to rent solar panels
  • Re-forestation and woodland creation


Collective impact

We believe that collaborative initiatives are important to address the critical and underserved sustainability challenges in investment markets, economies, society and the environment. We are proud to have real expertise on these topics across our company and we use those skills to collaborate with others with the aim of improving long-term outcomes for our clients, and the world they live in. Some highlights of our collaborations include:

  • Institutional Investors Group on Climate Change (IIGCC) – the European membership body for investor collaboration on climate change, with a mission to mobilise capital for the low carbon transition
  • Transition Pathway Initiative (TPI) – a global, asset-owner led initiative which assesses companies' preparedness for the transition to a low carbon economy
  • Principles for Responsible Investment (PRI) – leading global initiative on responsible investment
  • Thinking Ahead Institute (TAI) – a WTW-sponsored not-for-profit innovation hub with a mission to mobilise capital for a sustainable future
  • Willis Research Network (WRN) – a collaboration between academia and the insurance industry seeking to enhance our collective ability to understand, evaluate and manage climate risk

Collaborative initiatives – working together to address the sustainability-related challenges in investment.

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