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Thirteen leading international asset owners and five asset managers with over £2 trillion under management have launched the Transition Pathway Initiative (TPI) to better understand how the transition to a low-carbon economy affects their investments.

The TPI will assess how individual companies are positioning themselves for the transition to a low-carbon economy through a public, transparent online tool. The heads of funds involved launched the Initiative at the opening of the stock market at the London Stock Exchange on Wednesday.

Welcoming the initiative, the Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), Patricia Espinosa said:

"I applaud the new Transition Pathway Initiative and its founding members. It represents yet another potentially powerful way of aligning real-world global investments with the real-world urgency of meeting the goals, aims and aspiration of the Paris Climate Change Agreement".

The central goal of the Paris Climate Change Agreement is to limit the global average temperature rise to as close as possible to 1.5 degrees Celsius, which will only be possible if most of the existing fossil fuel reserves are left in the ground.

The Initiative has been led by the Church of England’s National Investing Bodies and the Environment Agency Pension Fund in partnership with the Grantham Research Institute at the London School of Economics. Data has been provided by FTSE Russell.

Adam Matthews, Co-Chair of the Initiative and Head of Engagement for the Church Commissioners and Church of England Pensions Board, said:

“The Transition Pathway Initiative is a tipping point for the market. The Initiative will identify companies that are aligned with the transition to the low-carbon economy and those most exposed to climate transition risk. There can be no doubt about the seriousness with which asset owners are taking account of this risks and it will be a key feature in the discussions we will be having with companies over the coming years.”

Preliminary assessments released on Wednesday include the oil and gas and electricity utilities sectors. As part of a phased rollout, management quality and carbon performance assessments of additional sectors and individual companies will follow in the coming months.

The tool has been designed to support the requirements of the Task Force on Climate-Related Financial Disclosures (TCFD), individually profiling future projected emissions against the two-degree target and current public policy commitments.

Read the full Transition Pathway Initiative press release and see the Transition Pathway Initiative website

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