Sustainability leader Ceres has published a blueprint for asset owners and pension funds, in which it suggests strategies for dealing with the risks that derive from climate change and resource scarcity to ensure long-term return.
Chris Davis, director of investor programmes, said, “Sustainable investing will require investors to think far more broadly about risk and opportunity across all asset classes.
“No investor can ignore the impacts of climate change on the food and agricultural sector, for example, or the economic costs of increasingly common severe weather events.”
However, he added, “It’s not all about risk. For example, there’s an estimated $6 trillion market for global clean energy investment that smart investors are taking advantage of.”
The blueprint has a focus on sustainable investment and on future challenges that the world might face, such as climate-related risks, population growth, energy demand and resource scarcity.
It says that investors cannot ignore these issues if they don’t want to be affected on the financial side of things, and therefore they have to integrate sustainability into their policies.
Ceres president Mindy Lubber, during the presentation of the report, said, “The financial risks of climate change and other sustainability threats will have profound effects on investment returns in the years to come, yet the traditional methods of financial analysis used by most large investors ignore these factors”.
In May, the Investor Network on Climate Risk (INCR), which is co-ordinated by Ceres, launched an initiative that would require firms them to disclose their environmental, social and governance (ESG) strategies in their annual reports.