Nuveen, the $1 trillion asset manager of TIAA , is partnering with leaders in climate change research on a unique initiative for the firm's investment professionals to advance its industry leading responsible investing expertise in meeting the sweeping portfolio risks posed by accelerating climate change.
Nuveen also announced that the firm is joining Climate Action 100+, a five-year initiative led by investors to engage with the world's largest corporate greenhouse gas emitters and other global companies that can drive the clean energy transition and help achieve the goals of the Paris Agreement on climate change.
Nuveen Takes a Leading Stance on Climate Risk Management for Investors
Nuveen is one of the first investment managers to initiate a specialized program for its 500+ investment professionals, across asset classes, on climate risk management. The specialized initiative will focus on how and where climate change may impact investment portfolios, with the goal of improving long-term investment outcomes for the firm's clients.
To deliver the program, Nuveen is working closely with the UN-supported Principles for Responsible Investment's Inevitable Policy Response initiative, a pioneering project preparing investors for the near-term policy response to climate change. Nuveen also is partnering with several leading climate research organizations helping to provide the firm with next generation data on physical climate hazards and their socioeconomic impact.
"These initiatives are just the latest evidence of our ongoing commitment to helping investors manage climate change's impacts, both emerging and long-term, a commitment we are fulfilling every day through our firm's Responsible Investing platform," said Jose Minaya, CEO of Nuveen.
An industry leader in responsible investing, Nuveen is incorporating financially relevant environmental, social and governance (ESG) factors into its investment processes across the entire firm, an effort that by the end of 2020 will encompass 100 percent of assets and will complement the firm's $29 billion in dedicated ESG and impact investment strategies currently under management. "While Nuveen will continue to offer a diverse range of investment strategies that allow clients to align their investments to renewable and energy efficient projects, this initiative underscores our belief that climate risk is relevant to all of our clients' investments to build portfolio with purpose while improving returns over the long term," Mr. Minaya said.
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Advancing the Assessment of Climate Change's Physical and Transition Risks
"Long-term investment performance depends, among other factors, on natural systems that provide clean water, abundant food, and many other global resources – systems that are threatened by worldwide climate change," said Amy O'Brien, Global Head of Responsible Investing at Nuveen.
"The wildfires now raging through the western United States are only the latest, dramatic example of extreme events rooted in climate change that can both devastate communities and pose systemic risk across a broad spectrum of assets," she said. "More and more, climate change will have a meaningful influence on economic growth; portfolios also are likely to be affected by the emerging public policy responses to climate change, focused on supporting the transition to a low-carbon economy. Understanding climate change risk in all of its forms is essential to mitigating its impact."
With the help of its climate research collaborators, Nuveen's program will focus on both the physical and the transition risks associated with climate change. Several specialized climate research organizations are working with the firm to model the physical impacts of climate change on investment portfolios across municipal bonds, real estate and real assets, translating physical climate hazards into actionable insights. PRI's Inevitable Policy Response helps investors navigate climate change's evolving policy and regulatory landscape in order to enhance portfolio resilience and inform strategic asset allocation.
"We believe that, by 2025, we will see a policy response to climate change with the potential to be forceful, abrupt, and disorderly – creating major winners and losers within investment portfolios," said Fiona Reynolds, CEO of PRI. "We're looking forward to working with Nuveen's investment professionals to help them understand how this response will likely unfold, the impact on the economy and what steps to take to successfully manage the risks."
Building on Record of Climate-Related Engagement
Nuveen's support for Climate Action 100+ builds on the firm's strong track record of engagement and proxy voting on climate-related issues, ranked #1 by Share Action among US asset managers in 2019.
Through Climate Action 100+, more than 450 investors with over $40 trillion in assets under management collectively are engaging companies to improve governance, curb emissions and strengthen climate-related financial disclosures. The companies include 100 "systemically important emitters," accounting for two-thirds of annual global industrial emissions. Nuveen is a long-time collaborator with and supporter of Ceres, a nonprofit sustainability organization that is one of the initiative's founders.
Source: Nuveen