Investor report highlights gap between climate change and action

A report published by a trio of institutional investment groups has found that whilst a majority of investors were increasingly aware of climate change and its risks, there remains a lack of definite action being taken.

The study, by the North American Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Australia/New Zealand Investor Group on Climate Change (IGCC), shows that 83% of asset owners see climate change as a “material risk or opportunity in their investment portfolios”.

However after assessing the risks posed by it, just over a quarter of these individuals (26%) have effected strategic change in their investments.

The trio’s report, called Global Investor Survey on Climate Change, draws statistics from a 2011 survey of 42 asset owners and 51 asset managers whose total assets exceeded £12 trillion.

“While it’s encouraging that more investors are concerned about the risks of climate change, many of them could be doing more to protect their clients and portfolios from those risks“, said Christopher Davis, director of investor programs at Ceres, the sustainability leadership group that coordinates the INCR.

“This summer’s extreme drought conditions, which are causing huge economic ripples across the US economy, are the latest example of why investors should be making climate change a core consideration in their decision-making.”

The climate change survey from the three organisations, who manage over $20 trillion in assets between them, comes after they launched a collaborative appeal in June urging governments in oil and gas producing nations to challenge the current control of methane emissions.

Stephanie Pfeifer, executive director of the IIGCC, explained how this latest call for investment action on climate change had so far reaped promising rewards, but that there was still a long way to go.

“It is encouraging that despite the turbulent economic climate investors have retained and in many cases built upon their engagement process relating to climate change”, she said.

“It is also important that investors embed climate risk assessments within investment decision-making processes, something they are now beginning to do.

“For progress to continue to be made, policy frameworks that stimulate low-carbon investment and provide investors with the tools to take further action will remain critical.

“Strong and stable policy also helps investors to adequately assess, quantify and therefore manage climate change risks alongside separate short-term risks.”

The report highlights that a growing number of individuals and companies are realising not only the potential risks that come with climate change, and are altering their investment portfolios because of it, but also the sustainable opportunities that emerge in the battle to adapt to and mitigate its impact.

Renewable energy, sustainable transport and water technology are just three areas that have become increasingly attractive areas for investment as we push towards a sustainable economy.

Blue & Green Tomorrow’s recent Guide to Sustainable Investment explores this notion in more detail, whilst our latest in-depth reports, The Guide to Limitless Clean Energy looks into the outstanding opportunities presented by renewables.

Further reading:

Investors urge governments to act upon dangerous methane levels

Biggest global investors call for urgent action on climate change