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Launch of Transition Pathway Initiative

January 11, 2017

For Immediate Release
January 11, 2017

Contact: Colette Nies, Managing Director, Communications
(847) 866-4296 or [email protected]

Glenview, IL—Wespath Benefits and Investments has joined 13 major global investors representing over $2.4 trillion (£2 trillion) in assets under management in launching the Transition Pathway Initiative (TPI) in London today at the opening of the London Stock Exchange. The TPI will assess how individual companies are positioning themselves for the transition to a low-carbon economy. Through a public, transparent, online tool designed to assess companies’ progress on this transition, TPI will enable investors to better understand how this shift could affect their portfolios.

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

Preliminary assessments released today 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 assessment tool TPI has designed supports the requirements of the Task Force on Climate-Related Financial Disclosures (TCFD), comparing future projected emissions to the two-degree Celsius target and other current public policy commitments.

Preliminary Key Findings
Preliminary assessments have already highlighted key findings, including:

  • Almost all 40 companies assessed are at least acknowledging climate change as a business issue (39 of 40). However, few companies are at the level of strategic assessment (level 4), meaning most can improve.
  • Electricity utilities have progressed marginally more than oil and gas producers.
  • The typical company is building capacity (15 of 40 are at level 2), meaning it explicitly recognizes climate change as a significant issue for the business, has a policy commitment to action, has set some form of energy or greenhouse gas emissions target, and discloses its operational greenhouse gas emissions.
  • The majority of companies also have board oversight of climate change policy (a factor in reaching level 3; 28 of 40), and incorporate ESG issues into executive remuneration (a factor in reaching level 4; 34 of 40).
  • The most common factors hindering progress are not having set quantitative targets for reducing operational greenhouse gas emissions (26 of 40), and not having had operational emissions data verified (22 of 40).

Investor Perspectives
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 risk and it will be a key feature in the discussions we will be having with companies over the coming years.”

Emma Howard Boyd, Chair of the UK Environment Agency, said “Businesses should be able explain to investors how they plan to manage climate change risks, invest and innovate on the way to the zero-carbon economy of the future. With the launch of the Transition Pathway Initiative, asset owners from around the world are sending a strong signal that portfolios will align in the future with companies that are taking the transition to a low-carbon economy seriously.”

Professor Simon Dietz, Co-Director of the Grantham Research Institute at the London School of Economics, said “The TPI brings transition risk to life for asset owners and asset managers. As well as allowing investors to objectively compare the progress of companies toward a low-carbon economy, the tool highlights the work governments still need to do to align public policy to the two-degree target agreed in Paris.”

Barbara Boigegrain, CEO and General Secretary of Wespath Benefits and Investments, said “For some years, Wespath Benefits and Investments (pension fund agency of The United Methodist Church) has recognized the transition underway to a low-carbon global economy and the need for us to understand the long-term trends affecting our investments. We will use our leadership position to influence other North American funds and investors to use the TPI in analyzing their portfolios.”


About Wespath Benefits and Investments
Wespath Benefits and Investments (Wespath) is a not-for-profit administrative agency of The United Methodist Church, with Church-authorized fiduciary responsibility for the benefit plans it administers and the assets it invests.

Prudent investment management decisions are an ongoing, long-term priority, supporting benefit plans for over 100,000 participants and approximately $21 billion in assets managed on their behalf, and for many United Methodist-affiliated endowments, foundations and other institutions. This fiduciary obligation reflects the stated values of the Church and helps ensure financial, environmental and social sustainability across all investments.

Wespath is the largest reporting faith-based pension fund in the world and among the top 100 pension funds in the United States. As a sustainable investor, Wespath is committed to active ownership through corporate and public policy engagement, proxy voting and the management of excessive sustainability risk. Through its Positive Social Purpose Lending program, Wespath invests in affordable housing, community development and expanded loan opportunities for disadvantaged communities worldwide.