Report: Investment Community Adapting to Climate Risk
Even in the face of ongoing economic difficulties and policy uncertainty, climate risk is increasingly driving investment strategies and decisions. This is the headline finding of a survey by the Global Investor Coalition on Climate Change, published in August, 2013. The report details the findings of a third annual, global survey of investment practices based on responses from 37 asset owners and 57 asset managers with assets totaling approximately $14 trillion. These investors are advancing their practices to address climate change in their investment activities, reflecting increasing awareness among the investment community that climate risks are worsening.
The survey finds that asset owners are taking specific actions to address the impacts of increasing climate risks on their portfolios. Many are undertaking climate risk assessments, and making changes to investment activities as a result. For example, as severe weather events increase in scale and frequency, investors are allocating more resources to resilient infrastructure projects. The survey also finds fundamental shifts in perception with respect to emissions intensive investments, with a number of investors choosing not to invest in such projects, or even divesting, for climate related reasons.
Chapter six of the report is dedicated to public policy and company engagement- of particular note from the standpoint of environmental governance. The survey finds that that on-going policy uncertainty makes measuring long-term climate risk and emissions exposure difficult, and that investors are engaging in activities that “encourage policymakers to provide a policy framework that is supportive of long-term investment decision-making and the move to a low carbon economy.” Advocacy is for clear, consistent, and predictable national, regional and international climate and clean energy policies designed to avert catastrophic climate change and facilitate low carbon investement. Parallel to policy engagement, the survey finds that corporate engagement by Asset Owners is substantially increasing, with emissions goals identified as a major issue raised in these engagements.
The Global Investor Coalition on Climate change is comprised of four regional investor networks – the Institutional Investors Group on Climate Change (Europe), the Investor Network on Climate Risk (North America), the Investor Group on Climate Change (Australia and New Zealand) and the Asia Group on Climate Change (Asia) – whose members include many of the world’s largest Asset Managers and Asset Owners. The report can be found online here. For more information, visit the website of the Institutional Investors Group on Climate Change.