The problem 

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1. The financial system has huge power over the fossil fuel value chain. If the world is to avert catastrophic climate change, greenhouse gas emissions have to almost halve by 2030, before sloping to net-zero by 2050. Publicly listed companies are responsible for around a quarter of global emissions and stand at the frontier of climate innovation. It is predominantly the financial system which holds ownership rights and powers over these companies.
 

2. Institutional investors increasingly rely upon engagement to influence their portfolio on climate change. The rise of passive investing and diversification of many of these institutions make ‘exit’ impossible. There is also a growing academic consensus that the principal alternative to engagement, capital allocation, can only influence companies under limited conditions.

3. Yet there is currently no way of measuring engagement impact. We have no reliable way to distinguish between successful and unsuccessful engagements, and no evidence-base from which to derive conclusions about best practice. Investor cannot optimise their engagements, or answer the growing legal expectation that they be able to verify their impact claims. Asset owners, stakeholders and civil society cannot currently hold investors to account on climate.

Our solution 

We have developed a novel methodology to empirically measure engagement impact. We use this methodology to help asset managers to independently verify their engagement impact, and to help asset owners to demand engagement impact as part of their fiduciary duty.

Our long-term goal is to help institutionalize the expectation that impact should be measured, and to develop an evidence-base from which general conclusions about best practice can be derived. We believe this has the potential to massively upscale the quality and additionality of climate engagement across the financial system.

Collaboration & our assessment 

We have developed a robust procedure for assessing assessing the engagement impact of investors. Investors often engage at a scale that makes it impossible to analyse every case. We get round this problem by sampling. We bring our data, analysis and conclusions together in an independent report.