Pacesetters: Setting the Tempo of Advanced Climate Investing

The report identifies four key challenges for climate investing: defining transition roadmaps, measuring success, engaging investee companies, and defining reporting metrics. It introduces the 'Climate Benchmark' tool, featuring over 80 activities, to help asset owners move from 'developing' to 'advanced' practices across vision, governance, and implementation.

• Asset owners identify four primary hurdles to climate investing: the creation and execution of transition roadmaps, the measurement of achievement and success, the active engagement of investee companies, and the definition of climate reporting metrics tailored to specific asset classes and managers.
• A transition roadmap serves to translate the complexities of global decarbonization into actionable steps for investors, aligning their portfolios with organizational values and vision. While some investors set net-zero commitments (NZCs), others avoid them due to data gaps or a belief that portfolio decarbonization is inseparable from the real economy's progress.
• The 'Climate Benchmark' tool, developed by Mercer and the World Economic Forum, allows asset owners to self-assess their progress across more than 80 activities in 10 categories. Analysis of over three dozen global asset owners revealed that more than 50% are still in the 'developing' stage across six of the ten categories.
• Advanced investors differentiate themselves by integrating climate-related competencies across all staff, linking employee compensation to climate targets, and using stochastic and deterministic modelling to quantify financial risks in their portfolios.
• Effective stewardship involves a sequential engagement process with clear triggers for escalation. Advanced practitioners prioritize quality over quantity and often use collaborative initiatives like Climate Action 100+ to increase their influence on high-emitting companies.
• Measuring climate success is hindered by a lack of standardized data and benchmarks. To overcome this, some investors use 'avoided emissions' frameworks to identify companies that provide low-carbon alternatives, which GIC Private Limited found correlated with 20% faster revenue growth than the MSCI ACWI IMI index over a three-year period.
• Climate reporting metrics are categorized into transition risk, physical risk, portfolio decarbonization, transition finance, and engagement. Advanced asset owners use these metrics in dashboards to track progress against net-zero commitments and to prioritize companies for engagement.

APA

World Economic Forum (2022). Pacesetters: Setting the Tempo of Advanced Climate Investing. https://www3.weforum.org/docs/WEF_Setting_the_Tempo_of_Advanced_Climate_Investing_2022.pdf

Chicago

World Economic Forum. Pacesetters: Setting the Tempo of Advanced Climate Investing. 2022. https://www3.weforum.org/docs/WEF_Setting_the_Tempo_of_Advanced_Climate_Investing_2022.pdf.

Wikipedia

{{cite report |author=World Economic Forum |title=Pacesetters: Setting the Tempo of Advanced Climate Investing |date=April 2022 |url=https://www3.weforum.org/docs/WEF_Setting_the_Tempo_of_Advanced_Climate_Investing_2022.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldeconomicforum2022pacesetters, author = {{World Economic Forum}}, title = {{Pacesetters: Setting the Tempo of Advanced Climate Investing}}, institution = {World Economic Forum}, year = {2022}, month = apr, url = {https://www3.weforum.org/docs/WEF_Setting_the_Tempo_of_Advanced_Climate_Investing_2022.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }