b'New F rameworks for Incorporating Climate Change into Investment DecisionsNew Frameworks for Incorporating Climate Change into Investment DecisionsIt It is a language for investors As of this writing, the carbon dio is a language for investors and companies and companies to discuss to discuss climate climate As of this writing, the carbon dioxide concentration in xide concentration inchange, change, to to weigh weigh its its risks risks and and to to explore explore its its opporopportunities. tunities. It It the ear ths atmosphere has reached over 415 parts per ts per the earths atmosphere has reached over 415 par involves a number of ways to evaluate governance, businessinvolves anumberof ways to evaluate governance, business million, the highest level in over 800,000 years.strategy management,metricsandtargets.also million, the highest level in over 800,000 years. strategy, , riskriskmanagement, metrics and targets. ItItisisalsoimporimportant tant to to note note that that the the TCFD TCFD considers considers the the impact impact of of climate climate change change on on a a companycompanys s perperformance formance rather rather than than a a Investors often talk about climate risk as something that liescompanys s impact impact on on the the climate, climate, making making it it a a framework framework that that Investors often talk about climate risk as something that lies companyfar isis relevant across sectors. Of course, fossil fuel and energyfar in in the the future. future. The The reality reality however however, ,is is that that we we are are already already relevant across sectors. Of course, fossil fuel and energy star intensecompanies are are among among those those on on the the front front lines lines here. here. starting ting to to see see signs signs of of it it in in financial financial markmarkets. ets. PPerhaps erhaps one oneintense companies ofHoweverof the the most most acute acute example example is is the the California California wildfires, wildfires, which whichHowever, , given given the the wide-ranging wide-ranging and and difficult-todifficult-to-avoid -avoid potential potential burned over875,000acres2018.Theincreasingsizeimpactsuncontrolled climate climate change, change, the the systemic systemic impact impact burnedover 875,000 acres inin2018. The increasing size impacts of of uncontrolled andseverity of of the the fires fires in in California California is is attributed attributed to to drought droughtonon the the broader broader economy economy and and society society across across industries industries needs needs to to and severity conditionsbebe examined.conditions as as a a result result of of warmer warmer temperatures. temperatures. PG&E, PG&E, one one of of examined. T oT omak make ebetter better informed informed investing investing decisions, decisions, we we theneedcomplete robust robust perperformance formance data data across across all all industries industries that that the two two main main California California electric electric utilities utilities associated associated with with the theneed complete fire,incurredmeasure how how well well businesses businesses are are adapting adapting their their technologies, technologies, fire, incurred liabilities liabilities of of $30B $30B and and has hasfiledfiled for for bankruptcybankruptcy. .measure AsAs of of this this writing, writing, the the carbon carbon dioxide dioxide concentration concentration in in the the ear earthsthspractices practices and and strategies strategies to to the the wide wide range range of of potential potential outcomes.outcomes.atmosphere atmosphere has has reached reached over over 415 415 parparts ts per per millionmillion, , the the highest highest level in over 800,000 years. The increased concentration ofTCFD -aligned disclosure, level in over 800,000 years. The increased concentration of TCFD-aligneddisclosure, which which remains remains voluntarvoluntary y for for nownow, , is is greenhousegaining greenhouse gases gases is is causing causing the the earearths ths temperature temperature to to warm, warm,gaining traction traction as as the the global global standard. standard. Here Here at at home, home, CPCPA A andglobal temperaturesCanadaencouraging members members of of the the accounting accounting profession profession and globaltemperatures are are on on a a trajectortrajectory y to to exceed exceed +3 +3 degrees degreesCanada is is encouraging Celsiustoto familiarizeCelsius of of warming warming by by the the end end of of this this centurcentury, yfar , far exceeding exceeding the the 2 2 familiarize themselves themselves with with the the recommendations, recommendations, and and the the degree Bankclimate change change risk risk for for the the degree target target that that scientists scientists suggest suggest would would lik likelyely limit limit the the amount amountBank of of Canada Canada also also includedincludedclimate of damage. A significantfirst time time in in its its 2019 2019 Financial Financial System System RRevieweview, , specifically specifically ofdamage.Asignificant ratcheting ratcheting up up of of policy policy and and action actionfirst isis required pointingrequired to to hasten hasten the the transition transition to to aalow-carbon low-carbon economy economy. .pointing to to the the TCFD TCFD and and its its merits. merits. hhhhhhhhhhhhggggggggghhhhhhhhhhhhgggggggggInvestor Considerations Jarislowsky FInvestor Considerations Jarislowsky Fraserrasers Approachs ApproachThisbackdrop creates creates unceruncertainty tainty for for investors investors in in the the form formAtJarislowsky Fraser Fraser (JFL), (JFL), we we value value TCFDTCFD-aligned -aligned corporate corporate This backdropAt Jarislowsky ofphysical risks, risks, both both acute acute (e.g. naturaldisasters) and andreporof physical(e.g.natural disasters)reporting ting as as parpart of t of our our investment investment process. process. WWe e are are also also committed committed chronicto engaging chronic (e.g. (e.g. water water scarcity), scarcity), as as well well as as in in the the questions questionsto engaging with with the the companies companies in in our our porportfolios tfolios to to increasingly increasingly surroundingtransition to a low-carbon economy What will alignJFL surrounding transitionto alow-carboneconomy. .What willalign their their reporreporting ting with with TCFD TCFD recommendations. recommendations.JFL has hastake eto to get get to to aa2 2 degree degree world? world? How How will will regulation regulation, ,such suchbeen aatrusted trusted institutional institutional investor investor for for many many decades, decades, and and we we itit tak beenas carbon What will will be be the the pace pace of of change changebelieve our our fiduciarfiduciary y duty duty is is to to consider consider all all the the material material risks risks ascarbon taxes, taxes, evolve? evolve?Whatbelieve intechnology (e.g. (e.g. smarsmart t grids grids and and carbon carbon capture), capture), and andassociatedin technologyassociated with with investments investments that that we we mak make eon on behalf behalf of of clients. clients. consumer consumer preference preference(e.g.(e.g. electric electric vehicles vehicles and and greener greener fuels)? fuels)? Whatpolicies and and social social changes changes will will be be necessarnecessary y to to ensure ensureOurapproach to to sustainable sustainable investing investing involves involves integrating integrating What policiesOur approach a a just just climate climate transition transition that that tries tries to to avoid avoid the the economic economic and andenvironmental, environmental, social social and and governance governance (ESG(ESG) ) factors factors into into the the societalinvestment societal disruptidisruptions ons from from such such a a dramatic dramatic change?change?hhhhhhhhhhhhhhhh investment process. process. NowNow, , TCFD TCFD has has provided provided a a new new language language toto frameconsideration of ofclimateclimate change, change, which which brings brings with withframe our our considerationit it a a gamut gamut of of risks risks and and opporopportunities tunities affecting affecting the the strategy strategy and and For investors and boards of directors, the primary yresilience of of a a business. business.And,And, because because we we think think its its imporimportant tant For investors and boards of directors, the primar resilience question has become: Just how resilient are ourtowalk the the walk, walk, in in 2019, 2019, we we also also published published our our own own question has become: Just how resilient are ourto walk assets and value creation strategies in the face ofinaugural inaugural reporreport on t on how how were were monitoring monitoring and and managing managing climate climate assets and value creation strategies in the face of risk climate change? risk on on behalf behalf of of our our clients. clients. This This means means explaining explaining how how our our climate change?governance governance and and strategy strategy incorporate incorporate climate climate risk, risk, disclosing disclosing the the carbonfootprint of of our our porportfolios, tfolios, and and examining examining the the resilience resilience carbon footprint More shareholders,of our Moreshareholders, and and more more companies, companies, have have begun begun to to look lookofour porportfolios tfolios to to climate climate change change and and the the policies policies designed designed to to closely at at the the risks risks and and opporopportunities tunities of of climate climate change. change. For Forcombat it. it. The The reporreport t will will liklikely ely evolve evolve over over time, time, in in accordance accordance closelycombat investorswithinvestors and and boards boards of of directors, directors, the the primarprimary y question question has haswith the the broader broader disclosure disclosure and and data data related related to to climate climate change. change. become: Just how resilient are our assets and value creation WWe e see see this this as as a a starstarting ting point point in in what what will will be be a a multi-year multi-year become: Just how resilient are our assets and value creation strategiesFFinding a a way way to tojourneystrategies in in the the face face of of climate climate change? change?indingjourney, and , and we we welcome welcome additional additional perspectives perspectives along along the the wayway. . answer answer this this question question fell fell to to the the Task Task Force Force on on Climate-related Climate-related Financial Financial Disclosure Disclosure (T(TCFD), CFD), established established in in late late 2015 2015 by by theFinancial Stability Stability Board, Board, the the organization organization responsible responsibleJFL has been a trusted institutional investor for the FinancialJFL has been a trusted institutional investor for formonitoring the the welfare welfare of of the the global global financial financial system. system. for monitoringmany decades, and we believe our fiduciarmany decades, and we believe our fiduciary duty y duty Drawing Drawing a a wide wide range range of of members members from from various various industries industries and andis to consider all the material risks associated with is to consider all the material risks associated with backgrounds, backgrounds, the the TCFD TCFD was was charged charged with with creating creating a a framework frameworkinvestments that we make on behalf of clients. investments that we make on behalf of clients. forcompanies and and investors investors to to disclose disclose their their approach approach for companies andexposure to to climate-related climate-related risks risks and and opporopportunities.tunities.and exposure If If you you wish wish to to discuss discuss how how you you can can incorporate incorporate sustainable sustainable Whatinvesting into your investments, contact Leanne Flett Kruger What the the TCFD TCFD brings brings is is not not just just a a long-term long-term focus, focus, but but also alsoinvesting into your investments, contact Leanne Flett Kruger at at a a commonframework to to drive drive comparability comparability and and consistencyconsistency LFcommon frameworkLFleltettKtKrurugegre@r@jfljgfllgolbobala.lc.ocmom.h.hhhhhhhhhhhhhhhhhhhhhhhhhh'