Climate Science and Investing

AB has forged a partnership with Columbia Climate School—bringing together climate and investing expertise to work toward a new understanding and new solutions to the mounting challenge of climate change.

Integrating Climate Science and Investing

Climate change is creating complex challenges for the planet and financial markets, and momentum is growing to address these issues through commercial, economic and regulatory action. That’s why AB is partnering with Columbia University’s Earth Institute, home of the world-renowned Lamont-Doherty Earth Observatory.

AllianceBernstein and Columbia Climate School Logo


Collaborating with Columbia's leading climate scientists, we’ve developed programs to educate AB investors and asset owners. And as the founding member of the Corporate Affiliate Program at the newly launched Columbia Climate School, we’re bringing together commercial enterprises and Columbia’s pioneering climate and sustainability research.

The goal? To shape the next generation of professionals striving to address the impact of climate change and develop new solutions.

Columbia Classroom
 

How the Partnership Started

In 2017, we started a conversation with leading scientists at Columbia University’s Earth Institute to help our investment teams better integrate climate change into our investment process, ultimately improving outcomes for clients.

Our dialogue produced a pilot climate-risk training program in February 2019 for select AB investment professionals across asset classes. The program, later formalized as the Climate Science and Portfolio Risk curriculum, addresses: the science of climate change; its policy, legal and regulatory aspects; solutions; and tools for translating climate science into financial impact.

Based on the pilot’s resounding success and complementary opportunities for joint research, we began a deeper collaboration with the Earth Institute, announced in September 2019 and managed by our Director of Environmental Research and Engagement.

Aerial view of the Columbia University campus at night with view of New York City skyscraper off in the distance..
 

Going to School: Climate Science and Portfolio Risk Training

In 2020, AB equity, fixed-income and multi-asset investment professionals completed the initial Climate Science and Portfolio Risk training—and so did our CEO and members of the AB Board. As part of the process, AB trained Columbia faculty members on how asset managers invest.

We’ve worked with AB’s Learning and Development Team to enhance the partnership and help advance our success in this vitally important arena by offering this training to all AB colleagues through a virtual Climate Science Library.  To date, over 250 AB investors and other employees have completed the 12 hours of course work. 

Through the program, AB investors gain better insights into the science behind a changing climate and what it means for security issuers, portfolios and the broader economy. Columbia scientists, meanwhile, learn more about the investment process, helping them deliver more useful information to companies, communities and governments.

 

Do You Know the Answers?

What was the cost impact for events related to flooding over the past decade?
What was the cost impact for events related to flooding over the past decade?

Over $1 Billion

What are 4 main focus areas in the effort to reduce Scope3 Emissions?
What are 4 main focus areas in the effort to reduce Scope3 Emissions?

1) Supplier Engagement
2) Low Carbon Products
3) Manage Waste
4) Transport

To be properly equipped for Disaster Resilience, what two elements must countries have in place?
To be properly equipped for Disaster Resilience, what two elements must countries have in place?

Horizontal Connections (connections between people) and Vertical Connections (connections between levels of goverment)

 

Informing Clients: The Client Climate Change and Investment Academy

We’ve always intended for the unique collaboration between AB and Columbia to serve the broader asset management industry, with asset owners and asset managers alike eager to explore the complex issues of climate change and integrate them more effectively in comprehensive investment decision-making.

That’s why AB launched the Climate Science and Portfolio Risk curriculum in 2021 through the Climate Change and Investment Academy. More than 1,000 AB clients and other institutions gained access to Columbia’s research and faculty in curated sessions. Prerecorded webinars were followed by virtual group Q&A sessions for audiences across the world.  Click below to learn more about the course offerings and topics:

  • Frameworks for case studies and decision support
  • Introduction to climate risk categories, uncertainties and opportunities
  • Defining data, actionable information, climate and financial models
  • Knowledge capital and the university-corporate partnership
     
  • A focus on emerging climate and emissions regulations in China and global implications
  • Policy developments around NDCs (nationally determined contributions) and potential divergence between economic growth and emissions
  • The future of global carbon pricing initiatives and other regulatory initiatives on the horizon
  • Gauging regulatory risk and impact in a highly dynamic policy environment
  • Global policy trends mitigating climate impact in particular sectors
     
  • Discussion of current litigation actions at the local, state, national and international levels
  • The basis and precedent for current litigation and potential corporate liability
  • Emerging best practices for corporations and other issuers to address this regulatory/litigation/headline risk
  • Key drivers of climate litigation, including climate change attribution and detection for and by various stakeholders
     
  • Applying lessons learned from the coronavirus to the study of and response to climate change
  • Challenges in scenario modelling, analysis and data availability from the epidemiological and climate perspectives
  • How changes in human behavior from environmental and health stress can contribute to the public’s capacity to address severe global crises
  • Examining various paths to building back from the pandemic in terms of speed, approach and competing interests
  • The integration of the private sector into disaster response going forward
     
  • Discussion of progress in technological solutions for adapting to and mitigating climate risk
  • The timeline for commercial viability
  • Potential impact on mitigating greenhouse gas emissions
  • Identifying and addressing gaps in support for the innovation ecosystem
     
  • The urgency of, and challenges to, integrating climate change into existing investment processes
  • Review of nonlinearities, cascading events and dissonance between time horizons
  • Potential changes to and from traditional macroeconomic drivers such as growth, inflation and capital allocation
  • Linking physical and transition risks and opportunities to financial-statement analysis
     


During these in-depth dialogues, participants and panel experts discussed diverse topics, from the impact of rising sea levels on coastal development to the relationship between climate change and social inequality and the effectiveness of carbon capture and storage in reducing global emissions.

 

Founding the Corporate Affiliate Program at the Columbia Climate School

In the first half of 2021, AB launched another phase in the collaboration between climate science and investment science. We became the founding member of the Corporate Affiliate Program at the newly launched Columbia Climate School. It’s the world’s first school built to focus exclusively on climate change and its challenges—with an emphasis on solutions.

AB’s commitment to the Climate School marks a new paradigm in the approach of financial-services firms to addressing climate change. For Columbia, partnering with a commercial business is recognition that the size, scope and challenge of climate change require a new approach in academia, leveraging the role of businesses and capital markets.

As the program’s founding member, AB will bring together commercial enterprises and Columbia’s pioneering climate and sustainability research. By integrating the unique perspectives and skills of investors and scientists, AB and Columbia seek to shape the next generation of professionals striving to manage climate risk and develop solutions.

 

Collaborating on Climate Research

The collaboration between AB investors and Columbia academics on a climate curriculum has spurred ideas for joint climate-change research projects. As part of an exclusive agreement, the two institutions have kicked off a research agenda focusing on the intersection of the academic facets of climate science with AB’s investment processes.

AB investors and Columbia scientists and experts will collaborate on climate issues in the investing process across portfolios, sectors, asset classes and regions. We’ll also embark on long-term, deep research projects exploring climate challenges, including the approach to net zero and the impact of stakeholders on achieving that target in the next 30 years.

By sharing the results of this research through thought leadership, workshops and other avenues, we’ll demonstrate how investors are applying new insights to inform their decisions and stewardship activities.

 
2021

AllianceBernstein Climate Change Statement & TCFD Report

 

Research Projects: From Renewables to Synthetic Biology

 

The Future of Renewables

The Future of Renewables: Examining approaches to forecasting solar, wind and hydro resource availability under a changing climate as well as the potential impact on resources under different global temperature scenarios.

 

Climate Accounting

Studying the work of various regimes and standard-setting bodies to integrate climate metrics into financial and accounting statements—with a view toward identifying and supporting a globally consistent framework.

 

Synthetic Biology

Research into engineering natural processes and organisms that could help the world reduce and adapt to the impacts from a changing global climate.

 

Physical Risks to Real Assets

Overlaying Columbia’s data streams on natural disasters and hazards at the county and municipal levels to help investors quantify potential damages to physical assets we invest in—including real estate and infrastructure.

 

The Impact of Climate Change on Marine Protein Production

Exploring the impact of rising sea levels, rising ocean temperatures and other variables on fisheries.

 

AB-Earth Institute Resources

 
ESG in Action
The Great Pivot: Climate Action and the Finance Sector
23 September 2021 / 75 min read
by Michelle Dunstan The intersection between climate risks and the allocation of private capital, and the role of the financial services industry.
ESG in Action
ESG in Action: Investing Lessons from Climate School, Class of 2021
ESG in Action: Investing Lessons from Climate School, Class of 2021
27 May 2021 / 16 min read
AllianceBernstein has developed, with our partners at Columbia University’s Earth Institute, the Climate Change and Investment Academy. This educational forum is designed to help our clients and partners learn more about the multifaceted science of climate change and the potential impact on investment decisions.
ESG in Action
A group of walruses lay on a floating iceberg in a turquoise Arctic sea.
ESG in Action: Improving Climate Change Models for Investments
21 January 2021 / 5 min read
by Sara Rosner Gauging the potential impacts of climate change on a company’s valuation or portfolio performance is extremely difficult. At AB, we’ve partnered with Columbia University’s Earth Institute to conduct an extensive review of existing climate change scenario-analysis providers and their various approaches.
 
Investment Insights
Assessing Climate Change in Portfolios: Expert Roundtable
Assessing Climate Change in Portfolios: Expert Roundtable
01 June 2020 / 12 min read
We asked two AB portfolio managers and two experts, from Columbia University and Willis Towers Watson, to provide their perspectives on what it will take for asset managers to effectively address climate change in their investment processes.
ESG in Action
The Nest Summit: Advancing Sustainability Subtitle: Climate Week: 2020
The Nest Summit: Advancing Sustainability Subtitle: Climate Week: 2020
27 September 2020 / 13 min read
by Sara Rosner Hear Sara Rosner, Director of Environmental Research & Engagement, speak on AB’s partnership with Columbia University’s Earth Institute, including AB’s collaboration with leading climate scientists at the Lamont-Doherty Earth Observatory.