Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate change
• Human rights
• Human capital
• Natural capital

Environmental Achievements

• PG&E met its climate resilience targets and MSCI removed its ‘Fail’ status in 2022.
• Volumetric Building Company demonstrated significant carbon reductions (61% – 65%) vs. U.S. benchmarks from a whole life carbon perspective.

Social Achievements

• Improved disclosure practices for a U.S. based REIT's sustainability bond.
• Engagement with automotive issuers on human rights risks in the supply chain resulting in improved commitment and disclosure (particularly in Europe and North America).

Governance Achievements

• Updated and expanded public ESG bond issuance best practice document framework for corporates, sovereign and municipals

Climate Goals & Targets

Environmental Challenges

• Lack of high-quality ESG data historically.
• Inconsistency in ESG data across issuers.
• Significant room for improvement in human rights, especially in high-risk sectors.
• Lack of data or standard to quantify whether portfolio decarbonization is linked to actual greenhouse gas emission reductions in the real economy.

Mitigation Strategies

• Investment in team and technology to incorporate ESG data into investment process.
• Development of proprietary ESG scoring frameworks across asset classes.
• Deepening engagement with issuers on material ESG issues.
• Development of a proprietary carbon attribution tool to measure and report the contribution of different factors to carbon emissions.

Supply Chain Management

Responsible Procurement

• Responsible sourcing (including responsible minerals, forced labor, working conditions)

Climate-Related Risks & Opportunities

Physical Risks

• Wildfires (PG&E case study)

Transition Risks

• Regulatory changes, market shifts (especially in energy sector)

Opportunities

• Growth in green Capex due to policies like the U.S. Inflation Reduction Act and EU Green Deal Industrial Plan

Reporting Standards

Frameworks Used: TCFD, GRI, SASB, UNGC, PRI, ICMA, CDP, SBTi, PCAF, TNFD, SBTN

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• Undertook its first firmwide GHG emissions inventory covering Scope 1, Scope 2, and relevant Scope 3 categories – setting 2019 as a baseline.

Governance Achievements

• Developed a four-pronged approach to support clients with specified decarbonization goals: managing the carbon footprint; investing in climate leaders; supporting climate solutions; and influencing change through engagements.

Climate Goals & Targets

Environmental Challenges

• Data limitations and quality issues for carbon performance metrics, especially Scope 3 emissions; challenges in obtaining consistent and meaningful carbon data from asset managers; uncertainties linked to climate models and data; limitations of stress-testing methodologies and data; the interplay between transition and physical risks is hard to model; the nexus with broader environmental and social factors add to the complexity.

Mitigation Strategies

• Continuously refining and expanding carbon measurement, data reporting, and portfolio optimization capabilities; leveraging internal corporate sector frameworks designed to evaluate climate risks; engaging with industry groups such as PCAF to evaluate and refine estimates of financed GHG emissions; developing proprietary carbon measurement and optimization tools; enhancing proprietary climate risk evaluation framework; developing tools and methods that seek to integrate relevant climate risk evaluations in investment decisions; focus on risk mitigation levers: PIMCO’s business model and investments diversification; climate risk integration and management process.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events; chronic impacts from increased temperatures, sea level rise and precipitation

Transition Risks

• Policy, legal, technology, market, and reputation risks; tightening carbon regulations; energy transition

Opportunities

• Investment opportunities in clean energy and climate solutions; growth in climate-related requirements and requests from clients; sustainable bond market growth

Reporting Standards

Frameworks Used: TCFD, PCAF, SBTi

Environmental Metrics

ESG Focus Areas

• Climate Change
• Social Impact
• Governance

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• rise in frequency of extreme weather events

Transition Risks

• policy shift towards 1.5 - 2°C temperature rise scenario

Reporting Standards

Frameworks Used: ICMA Green and Social Bond Principles, Sustainability Bond Guidelines, TCFD, ISSB, Greenhouse Gas (GHG) Protocol, Science Based Targets initiative (SBTi), International Energy Agency (IEA), Intergovernmental Panel on Climate Change (IPCC), EU Taxonomy, EU Green Bond Standard