Climate change – a key issue for investors
Action by companies to tackle Climate Change currently falls well short of what scientists and politicians increasingly believe to be necessary. Investors can play a key role in closing that gap.
Following the Stern review of the economics of Climate Change, an increasing number of investors believe they will be better off if dangerous Climate Change can be avoided.
Practical steps for investors:
- Assess your own exposure and how well the companies you invest in are responding
- Send powerful signals by making carbon reduction strategies part of your valuation models where the impacts are financially significant
- Engage with medium to large energy users to make Climate Change a major corporate responsibility issue
- Invest in "solution" companies (renewable energy etc); though some solutions may be better than others
- Insist on carbon disclosure by the companies you invest in
- Speak clearly to governments about the need for effective systems to price and reduce total emissions
The EIRIS role
EIRIS’ climate change toolkit incorporates three products to help investors mitigate climate risks and maximise opportunities.
The EIRIS report Global corporate response to climate change and the implications for investors shows there are models of good and better practice in many sectors and many countries. But the typical Company, even the typical high impact company, is just not doing enough. We will up-date this research as a "Carbon Barometer" of the corporate response to Climate Change on a regular basis. Investors can benchmark their own strategies against this and learn where progress is being made - and where it is most needed.
The same EIRIS research then feeds our Carbon Profile, Carbon Engager and Carbon Risk Tools, all designed to provide practical solutions to investors who want to know where they stand now, and what to do next.
Can investors really make a difference?
Investors act globally already. A global portfolio of companies has a yet more global supply chain behind it. Tackling Climate Change is going to require major capital investment decisions, and sustained attention all round the world. Investors acting on the view that Climate Change is bad for them can transcend government disagreements and bring a vital new perspective to the Boardroom and the international negotiating table.
