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AMP Capital included in UNPRI Leaders Group

AMP Capital has been included in a prestigious list celebrating excellence in responsible investment, amid a turbulent year during which controversy after controversy has rocked the investment manager.

AMP Capital was named alongside 16 asset owners and 20 investment managers in the United Nations' Principles for Responsible Investment (PRI) Leaders' Group 2020, all celebrated for their responsible investment work in climate reporting.

While the leaders group was largely evenly split between investment managers and asset owners, there was a better representation of asset owners in the group relative to the PRI's total reporting base.

Some 4% of all asset owner signatories made it to the 2020 list, compared to just 1% of investment managers.

There were seven other Oceania-based signatories that made the list, including Australian Ethical Investment, Aware Super, CBUS, Dexus, Lendlease, Charter Hall Group and New Zealand Superannuation Fund.

The largest group of representatives in the list was from Europe, however, Oceania representatives were particularly well represented, with 5% of UNPRI's Australian and New Zealand signatory base making the 2020 Leaders' Group.

Larger signatories also were better represented within the group than smaller ones, the PRI said, with nearly 10% of the signatories that made the Leaders' Group in 2020 having an asset under management above US$250 billion. Less than 1% of signatories with an AUM below US$10 billion made the cut.

UNPRI said signatories in the Leaders' Group all have well-developed processes for reporting on climate-related practices, and also have robust governance structures to manage them.

"Ultimate oversight and accountability for climate-related issues tends to lie with boards, but many leading signatories also demonstrate well-established internal climate and ESG functions, such as cross-functional advisory groups, committees and task forces," it said.

Among the Leaders' Group, senior level staff will often have management and assessment responsibilities relating to climate issues, UNPRI said.

"They review strategies and policies on climate which cover the entire investment process, from investment beliefs to evaluation, and set priorities and review targets," it said.

"We see examples of leading signatories that address climate change through an overarching risk reporting framework, where data-driven dashboards are used for senior management to monitor climate risks.

"Boards receive regular and comprehensive updates to monitor and oversee the progress made on climate-related targets and goals."

Leading signatories were also transparent about their governance functions in their UNPRI Transparency Reports, and often mentioned specific internal roles with climate responsibilities, it said.

These frameworks will often be set out in annual reports and public policies, UNPRI said.

"Some of our leading signatories also apply a variety of instruments to foster board and management-level competency on climate issues and link their KPIs and remuneration to climate-related targets, making climate an integral part of their organisations," it said.

In its climate report, AMP Capital acknowledged the transition to a low carbon economy was underway, and that meeting the Paris Climate Change commitment will take significant decarbonisation over the coming decades.

"AMP Capital has a fiduciary duty to act in the best interests of investors and clients when making investment decisions, including considering climate risks and opportunities," it said.

"The risks and opportunities related to climate change and a low carbon transition may manifest, over various time horizons, as potential risks to the returns of the listed and unlisted companies, real estate, infrastructure and fixed income instruments in which AMP Capital invests."

The investment manager also focuses on understanding how the complexities of climate change may impact its corporate reputation in the marketplace, as well as the demand for its investment products.

"Our analysis of climate risks and opportunities includes consideration of carbon regulation, direct and indirect costs, geographic exposure to climate policy, capacity of businesses and assets to adapt and manage risks, and any transitional governmental assistance programs," AMP Capital said.

AMP Capital currently provides low-carbon investment options to clients, while its flagship property fund recently established a long-term net zero carbon strategy by 2030.

It also provides clients opportunities in the growing market for green bonds, and funds projects in renewable energy, energy efficiency, transport, sustainable forestry and climate resilience, it said.

It comes following an extended period of intense criticism at AMP after sexual harrassment allegations were made against former AMP Capital chief executive Boe Pahari.

AMP Australia chief executive Alex Wade also departed suddenly, which the AFR later reported was in response to allegations of misconduct, including sending explicit photos to female staff.

Read more: AMP CapitalAustralian Ethical InvestmentAware SuperBoe PahariCBUSCharter Hall GroupDexusLendleaseNew Zealand Superannuation FundParis Climate ChangeUnited NationsUNPRI Leaders Group
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