This tool presents initial technical guidance to help institutional investors implement risk-based due diligence to identify and respond to adverse climate risks and impacts directly linked to their operations, products and services, based on the OECD Guidelines and the OECD Due Diligence Guidance for RBC as well as existing practices and tools. This draft guidance can be a useful resource to investors in the context of changing regulatory requirements, market practices and stakeholder expectations.
Although investors have a wealth of existing tools and resources to draw on in carrying out risk assessment for adverse climate impacts, this tool has identified several outstanding gaps and challenges investors may face in carrying out due diligence with respect to climate impacts directly linked to their operations, products and services. In that regard, additional research, analysis and dialogue will be needed to:
Explore the connections and differences between environmental and financial materiality of climate change, and their implications for metrics, targets, standards, and disclosure frameworks.
Clarify what appropriate climate mitigation benchmarks and alignment methodologies can be recommended for investors under an RBC due diligence approach, (e.g. climate alignment frameworks).
Provide guidance on appropriate and viable pathways to help investors meet their climate mitigation objectives and targets at portfolio level and within each asset class.
Further apply RBC due diligence standards to help enhance the credibility, comparability and tracking of financial sector and real economy net-zero transition commitments; and
Develop useful metrics, targets and benchmarks related to climate adaptation and resilience, to help investors track climate due diligence performance in terms of climate adaptation and resilience at portfolio and asset class levels.
More broadly, additional dialogue will be needed to consult, engage and inform institutional investors (and other key stakeholders) on assessing, managing and reporting on impacts associated with their portfolios and investment decisions as well as clarifying expectations for investee corporations in relation to due diligence of adverse climate impacts and risks.
