Morgan Stanley to disclose climate impact of investments

Morgan Stanley will attempt to drive engagement with a new global standard across its sector

Morgan Stanley currently holds more than $2trn in client assets, growing exponentially from $546bn in 2008 during the financial crash. The company has this week committed to measuring and disclosing the environmental and climate impact of its investments and loans.

To add accountability to this commitment, Morgan Stanley has become the first US bank to join the Partnership for Carbon Accounting Financials (PCAF) and its Steering Committee.

PCAF was launch in 2019 and consists of more than 60 banks and investors that represent more than $5.3trn in assets under management. PCAF is developing a global accounting standard to be used by financial organisations to help measure, disclose and reduce climate impacts.

“We are excited to join PCAF and to support the important work they are leading to build a methodology for global banks’ efforts to track and measure climate change risks,” Morgan Stanley’s chief sustainability officer and chief executive of the Morgan Stanley Institute for Sustainable Investing, Audrey Choi said.

PCAF members will seek to create the global carbon accounting standard to assist the wider industry in measuring emissions and the climate impacts of its decisions. While it is a separate entity from other climate frameworks used by the sector, notably the Task Force on Climate-related Financial Disclosures (TCFD), the standard is being designed to synergise with other frameworks.

PCAF’s executive director Giel Linthorst added: “We are very excited about Morgan Stanley’s leadership in sustainability and believe they will bring an important voice to our management group.”

“As we work towards COP26, and a critical year ahead in aligning the finance sector with the goals of the Paris Climate Agreement, we believe that PCAF and member financial institutions will play an important leadership role in that work.”

Morgan Stanley’s announcement follows a mixed track record on climate action. In the last three years, the company has invested almost $100bn in fossil fuel companies and projects, as noted by the Rainforest Action Network.

The company was also named along with other asset management firms that were accused of collectively failing to drive alignment with the Paris Agreement in their business models and policy lobbying.

The report from non-profit InfluenceMap analysed how closely the portfolios of 15 of the world’s largest finance firms aligned with the Paris Agreement’s two pathways, and the ways in which these businesses have voted in climate-related resolutions and engaged in climate-related lobbying.

Morgan Stanley was ranked in the middle of the rankings, alongside the likes of Vanguard, State Street, BlackRock, JP Morgan Chase and Goldman Sachs.

InfluenceMap found that these firms are engaging the companies they invest with on climate issues, but without using climate models such as scenario analysis in line with the Paris Agreement.  

Sustainable Investment Digital Conference 

Taking place on 7-8 September 2020, edie’s Sustainable Investment Digital Conference unites corporates, asset managers and asset owners for frank discussion around disclosure priorities, roadblocks and innovations. Featuring green finance experts from the likes of ING, BlackRock and BNP Paribas, the event will explore how corporates and financiers can move beyond ESG in a post-pandemic world. 

For more information and to register, click here. 

Matt Mace