Source: London Stock Exchange
London Stock Exchange Group (LSEG) will support the TPI Global Climate Transition Centre (the Centre) by providing data, expertise and funding over the next five years to create a key part of the post-COP26 architecture for sustainable finance.
Set to be based at the London School of Economics Grantham Research Institute from early 2022, the Centre will dramatically scale the Transition Pathway Initiative’s (TPI) independent assessments of companies from 400, today to 10,000. Coverage will also be expanded to include fixed income markets.
By significantly expanding TPI’s coverage of global financial markets, the TPI Global Climate Transition Centre will provide investors with critical insights into how companies are transitioning to a low-carbon economy, supporting shareholder engagement and the reallocation of capital needed to align portfolios with the goals of the 2015 Paris Agreement.
Relevant indicators for assessment include company’s climate policy, emissions reporting and verification, targets, strategic risk assessment and executive remuneration. To support wider adoption and enhance transparency and accountability, the Centre has committed to making its independent climate assessments of issuers free and publicly available.
The support provided reflects LSEG’s recent commitment as a founding member of Net Zero Financial Services Providers Alliance (NZFSPA) to align all relevant financial market infrastructure with a 1.5-degree trajectory and is consistent with its open access approach. LSEG became the first global stock exchange to sign up to United Nations Climate Change ‘Race to Zero’ in February 2021, setting 2030 and 2050 targets using Science Based Targets initiative (SBTi) standards.
With BlackRock joining today as a supporter of TPI, the asset owner initiative is now backed by investors with a combined $40 trillion in assets under management or advisement. Its assessments are already used as part of global investor engagement initiatives such as the Climate Action 100+, which targets real world emissions reductions by the 167 most carbon intensive companies.
LSEG’s global index, data and analytics provider, FTSE Russell use TPI assessments in its range of climate indices. Highlighting investor demand, the Church of England Pensions Board selected the FTSE TPI Climate Transition Index for a £600 million mandate in January 2020. In LSEG’s Capital Markets division, the London Stock Exchange’s Sustainable Bond Market (SBM) continues to support issuers raise capital tied to sustainability objectives. Over 300 green, social, and sustainability bonds have so far been listed on SBM, raising a combined £87 billion. In September 2021, UK Government listed its inaugural £10 billion green gilt.
David Schwimmer, CEO, LSEG said:
“The creation of the TPI Global Climate Transition Centre marks an important step forward in accelerating the climate transition. The Centre will dramatically scale the TPI’s ability to provide investors with rigorous, independent and transparent assessments of company performance on climate change and enable expansion across asset classes.
“This will give global investors the analysis they need to better engage with issuers, re-allocate capital and ultimately achieve net zero across their portfolios. TPI’s climate assessments are already an important component of FTSE Russell’s Paris-aligned indices and we are delighted to strengthen our partnership with them.”
Adam Matthews, Chair of TPI and Chief Responsible Investment Officer for the Church of England Pensions Board said:
“The TPI Global Climate Transition Centre is a strategic intervention to enable investors to manage the risks and opportunities presented by the low carbon transition and in support of the Paris Agreement. We couldn’t be more delighted to have LSEG and LSEG’s global index, data and analytics provider FTSE Russell as a core partner backing the TPI Centre. FTSE Russell already uses TPI assessments in its range of climate indices and the potential to scale up use of TPI data through the new Centre is enormous. This Centre is set to be a key part of the post COP26 financial infrastructure placing transparency and accountability at the heart of the investment system to support real world change.“