Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Social Issues (e.g., affordable housing)
• Sustainable Investments

Environmental Achievements

• Financing electric vehicles (EVs) in auto ABS, solar panel installations in solar ABS, and various property-related energy-efficiency improvements in residential and commercial MBS.
• Supporting energy efficiency upgrades in real estate and transportation through securitized investments.

Social Achievements

• Addressing lack of affordable housing with targeted lending.
• Supporting housing affordability and financial inclusion initiatives through securitized investments.

Governance Achievements

• Joined the Sustainable Market Initiative Asset Owner and Asset Manager Taskforce to accelerate the transition to a net-zero world.

Climate Goals & Targets

Environmental Challenges

• Underwriting climate risk in the securitized market is different than in other markets.
• Quantifying climate risk, even with insurance policies, is challenging.
• Scalability and relative value constraints in ESG-labeled bond issuance.
• Some labeled issuers may have limited changes to lending practices and transparency.

Mitigation Strategies

• Using third-party models to assess climate risk on property-backed securities.
• Focusing analysis on deals acutely exposed to climate risk (e.g., large trophy assets in risk-prone areas).
• Investing in unlabeled green debt with strong ESG characteristics.
• Defining and incorporating ESG criteria in fundamental research.
• Engaging with issuers for additional data and transparency.

Supply Chain Management

Responsible Procurement

• Supporting issuers with strong ESG practices.

Climate-Related Risks & Opportunities

Physical Risks

• Climate-related losses in property-backed securities

Transition Risks

• Regulatory changes impacting securitized markets

Opportunities

• Financing climate risk mitigation efforts (e.g., EVs, solar, energy efficiency)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Energy Transition
• Physical Climate Risks
• Net-Zero Alignment
• Corporate Sustainability Strategies
• Social Factors (Diversity & Inclusion, Labor Rights)
• ESG-Labeled Bonds
• Regulatory Environment

Governance Achievements

• Joined the Partnership for Carbon Accounting Financials (PCAF) to improve financed emissions reporting.

Climate Goals & Targets

Environmental Challenges

• Lack of clarity and inconsistent interpretation of EU regulations on sustainable investments.
• Insufficient disclosure by portfolio companies.
• Difficulty in defining and measuring social factors.
• Rapidly evolving and sometimes inconsistent regulatory landscape across jurisdictions.

Mitigation Strategies

• Partnered with the Fletcher School at Tufts University to evaluate exclusion policies of sustainable funds.
• Aligned TCW's Article 8 and 9 fund exclusions with industry best practices, implementing more restrictive policies in some cases.
• Joined PCAF to develop a uniform methodology for measuring and disclosing GHG emissions.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events (heat, wildfires, floods, hurricanes)

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Investments in energy transition across various sectors

Reporting Standards

Frameworks Used: SFDR (EU Sustainable Finance Disclosure Regulation), TCFD (Task Force on Climate-related Financial Disclosures), PCAF (Partnership for Carbon Accounting Financials), PRI (UN-Supported Principles for Responsible Investment)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Energy Transition

Climate Goals & Targets

Environmental Challenges

• Aging and neglected electric grid infrastructure vulnerable to severe weather events.
• Demand for electricity exceeding current infrastructure's ability to generate, transmit, and distribute.

Mitigation Strategies

• Investing in grid modernization projects.
• Improving energy efficiency to reduce strain on the grid.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Severe weather events impacting electric grid

Opportunities

• Investments in grid modernization
• Investments in renewable energy and electricity distribution

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)

Investments in renewable energy and grid modernization contribute to these goals.