COMPANIES AND
CLIMATE CHANGE

A research application of theBY SECTOR:

AIIB-Amundi Climate
Change Investment
Framework

Data availability and quality
gaps drive differences inperformance

The AIIB – Amundi Climate Change Investment
Framework
Launched in September 2020, the AIIB - Amundi Climate Change
Investment Framework (CCIF) equips investors with a benchmark forassessing investments against climate change-related financial risks
and opportunities. The CCIF translates the three objectives of the Paris
Agreement into fundamental metrics that enable investors to assess anissuer’s level of alignment with climate change mitigation, adaptation andresilience, and low-carbon transition objectives. For each objective, the CCIF
sets out key metrics to assess financial risks and opportunities. The CCIF
was jointly developed by AIIB and Amundi and was endorsed by the Climate
Bonds Initiative (Climate Bonds).

Report summary
A new report presents the first research application of the CCIF on threelevels: sectors, companies, and issuers of debt securities. The research
universe comprises corporates domiciled in AIIB Members predominantly
in EM Asia, and operating across AIIB’s focus areas. The report and its
constituent analyses were produced by a consortium of organisations led
by AIIB and Amundi: the sector-level analysis was contributed by FitchSolutions, the company-level case studies by the Carbon Trust, and theissuer and bond-market level analysis by Climate Bonds. Key findings andconclusions from each level of analysis are presented below. This report
reviews the overall market and is not specific to AIIB and/or Amundi funds.

This analysis compiled sector-level low carbon
transition trackers, assessing and scoring theperformance of 208 companies across eightsectors: autos, basic industries, healthcare, telecoms, energy, technology /electronics, utilities, and transportation. Key findings are outlined below.

1. Using the CCIF shows high variation in sector alignment with
the Paris Agreement objectives.
a. Mitigation: Most sectors report on mitigation but inconsistencies abound.
Sectors are generally reporting carbon emissions and carbon reduction
targets however the underlying data, methodology and scope is inconsistent.
b. Adaptation: Limited reporting on the physical risks related toclimate change. Sectors are limited in reporting their physical exposure
to climate change. Alternative data sources and analyses, such as using
country-level scores as a proxy, are sometimes required to assess sectors’
efforts on adaptation.
c. Financial Contribution: Varying performance by sectors. Sectors witha higher correlation between direct carbon emissions and business models,for example energy, utilities, and autos, have more detailed policies and data
related to financial contribution. Conversely, for sectors where emissions areindirect, policies and data related to financial contribution are less explicit.
2. The CCIF is a robust benchmarking tool, but financial capability
should also be considered in assessing the companies’ ability
to transition. Reducing carbon emissions, ensuring resilience, andinvesting in green technologies are all capital-intensive processes thus acompany’s green transition is partly contingent on its financial health. In
acknowledgement of this, financial capability was added to the CCIF.

Companies and Cimate Change The AIIB – Amundi Climate Change Investment Framework

1

BY COMPANY:
Some progress, but work
remains especially on
climate adaptation
This analysis compiled ten company casestudies from the following sectors: energy,
telecom, transport, utilities, healthcare,automotive, basic industries, and technology &electronics. The target companies were among some of the more advancedorganisations incorporating climate mitigation and adaptation strategies
into their Asian operations. The geographies covered include China, India,
South Korea, and Singapore. Key findings are outlined below.
1. Greater focus on renewable energy and GHG measurement. Mostof the companies had adopted climate mitigation strategies by procuring
renewable energy and measuring and reporting at least Scope 1 and Scope
2 greenhouse gas (GHG) emissions. Fewer companies had set 1.5-degreescience-based targets and/or publicly committed to net zero goals.
2. More efforts needed to devise and implement detailed adaptation
measures. Most of the companies had conducted physical climate risk
assessments. However, few companies had incorporated financial analyses
and implemented measures to respond to these risks. In addition, while
many companies disclosed their climate mitigation plans, few companies
focused on long-term climate adaptation plans.

2. Best performers were characterised by significant climate-aligned
revenues and being in low-risk areas. Together, these companies hadoutstanding debt of USD466bn. However, due to the unpredictable natureof climate impacts, these companies may nonetheless be exposed toclimate risks if they do not develop credible transition, adaptation andresilience strategies.
3. Most companies are subject to physical climate risks but are nottaking action to manage them. Only 14% of companies researchedhave an adaptation and resilience plan in place, leaving the rest exposed
to potential financial losses. This is particularly relevant for emerging
market (EM) companies, as many already suffer disproportionately from thephysical impacts of climate change. Further planning and implementation
action is strongly recommended to manage climate risks.

OutlookThis research applies the CCIF to the analysis of the climate performanceof different sectors, companies, and debt issuers. The research suggeststhat while sectors and companies are climate-mitigation focused, moreconcerted efforts must be channeled into climate adaptation planningand implementation. For sampled companies, the diversity of operational
locations, inconsistency in climate mitigation and adaptation data, and lackof financial contribution, were among the challenging factors in performing
well across all three CCIF metrics.

3. Increased investment into green technologies and integrationof circular economy in operations: Most companies focused on
optimising energy consumption across their products and services throughinvestments in energy-efficient technologies. Continuous research anddevelopment initiatives for exploring green technologies, and life cycle
assessments in most of the analysed companies were observed.

BY ISSUER:
Companies contributing to thetransition are not necessarily
prepared for climate risksThis analysis includes 483 issuers originatingfrom 33 geographies. Key findings are outlined
below
1. No companies performed well across all three CCIF objectives.
Even among green bond issuers, this analysis did not identify any issuersthat did well on all three objectives of the CCIF: mitigation (target-settingand strategies), adaptation (low risk exposure and/or adaptation plans andstrategies), and financial contribution (climate-aligned revenues).

© Published by Climate Bonds Initiative, October 2022 www.climatebonds.net
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Companies and Cimate Change The AIIB – Amundi Climate Change Investment Framework2