Fossil fuels and carbon intensive operations top concerns for investors

Investors are becoming increasingly aware of how the effects of climate change can impact on their investment portfolio and returns. This has led to investors considering the risks they are exposed to.

The campaign to divest from fossil fuels has been gathering pace in recent months. Universities, pension funds and charities have all been targeted. The changes the campaign has created demonstrates the power investors and shareholders have. Last month a coalition of 17 philanthropic foundations, with combined assets of almost $2 billion (£1.2bn), pledged to divest from the industry.

According to online news source Pensions & Investments, pension funds are now examining the risks of fossil fuel exposure to a greater extent. As the conversation around sustainable investment moves into the mainstream more and more, investors are considering implementing environmental and social governance (ESG) polices.

Linda-Eling Lee, head of ESG research of MSCI, told the website, “It is probably the one (issue) that is highest on the agenda of many of our clients. We’re getting more questions about it and more discussion around it than probably any of the other issues.”

According to a survey published lat year, the majority of investors now view climate change as a “material risk”. Some 53% of investors were found to use climate change as their motivation when investing in or divesting from certain stocks.

Former Irish President Mary Robinson recently spoke out about the issue. She said that the fossil fuel divestment campaign is a “shining example” of what must be done in the fight against climate change. She added that divesting from fossil fuels builds “capacity and resilience”.

Further reading:

Major philanthropic foundations add backing to fossil fuel divestment drive

Church of England unlikely to ditch fossil fuel investments

Climate change a ‘firmly established’ material risk for mainstream investors

Investors worth $3tn put pressure on fossil fuels industry to rethink future

Fossil fuel divestment ‘builds capacity and resilience’, says Mary Robinson