Investors raise questions over climate change adaptation risks
Published|23.01.08
Acclimatise has assisted with the publication of a report exploring the investment consequences of unavoidable climate change by a group of major UK investors. In launching the new initiative, Insight Investment, Henderson Global Investors, RAILPEN Investments, and the Universities Superannuation Scheme, urge investors and companies to address those impacts of physical climate change which are now unavoidable.
The report – “Managing the Unavoidable: Understanding the investment implications of adapting to climate change” – is the first document to be issued by the group’s collaborative research project, which aims to address the ways in which companies and their investors are likely to be affected.
The report’s key points include:
• Whilst there has rightly been considerable emphasis on reducing greenhouse gas emissions, the lack of attention on the consequences of the now unavoidable impact of physical climate change may have significant long-term implications for companies and their investors.
• Tools need to be developed to aid companies and investors in understanding the risks and opportunities associated with climate change.
• Climate change risks need to be incorporated into investment analysis and decision-making as they may affect the timeframes over which investment decisions are made, and the criteria against which performance is measured.
• Investors need to engage with companies to ensure they have appropriate climate change adaptation systems in place.
• Investors also need to engage with policy makers to ensure the views of long-term investors are taken into account in policy formation in this area.
This report will be followed by four further studies to be produced by Acclimatise highlighting the risks and opportunities faced within specific sectors (electric utilities, oil and gas, real estate and water utilities). The group hopes this series will stimulate companies, investors and policy makers to view adaptation to a changing climate as a serious concern.
Peter Moon, CIO of USS, stated: “We need more and better information about how companies and other assets will be affected so that we can make better informed decisions as to how we allocate our long-term capital.”
Rory Sullivan, Head of Investor Responsibility at Insight Investment, added: “Adaptation has been the poor relation in the climate change debate. This project will provide us and other investors with a framework within which to analyse all of the risks – and opportunities – that a changing climate brings.”
A copy of the report Managing the Unavoidable: Understanding the investment implications of adapting to climate change is available for download from our resources section.
If you would like to hear more about our work with the financial services industry and the risks and opportunities presented by climate change then please contact us.