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DESCRIPTION: ESG in Action As climatechange intensifies, so do the physical and transition risks to industries and companies. But how do investors quantify those changes? Historically, they’ve measured a portfolio’s climate impact based on its carbon footprint or weighted average carbon intensity. By Sara Rosner.
While these are welcome steps in the right direction — given the recent backtracking among US asset managers on prior climate commitments — there are significant questions about how these companies can deliver risk mitigation results for their clients when stewardship teams are split.
Financial organisations thus have a major role to play in the decarbonisation of the global economy, yet it is estimated that since the Paris Agreement in 2015, the 60 largest banks have instead invested $5.5 Clearly much more needs to be done to pivot towards more sustainableinvestment and lending practices.
This week’s blog marks the first anniversary of Russia’s invasion of Ukraine by noting five of the changes it has wrought to sustainableinvesting. A selection of this week’s major stories impacting ESG investors, in five easy pieces. In the Global North, food shortages and panic buying marked a severe cost-of-living crisis.
C of warming, the Inevitable Policy Response calculates that current government policies, ie those in place pre-COP28, will only limit climatechange to 1.8°C Remco Fischer, Head of ClimateChange at the UN Environment Programme Finance Initiative, sees less risk for investors taking bets on a 1.5°C Lee suggests not. “In
Research predicts new demands on asset managers, as clients’ sustainableinvestment priorities mature. Institutional and intermediary clients’ sustainableinvestment demands are growing increasingly sophisticated, requiring managers to reappraise their skills and budget levels. A long way to go”.
“It’s a dangerous game to play, and it is undermining investor confidence; there are certain issues, like climatechange, where political games shouldn’t be played.” Matthew isn’t the only one dissatisfied with progress.
Responsible investment is most often defined as investment that promotes environmental, social, and governance elements/practices deemed as responsible , though it can also be a broader term for other types of similar investment. It also includes risks related to resource scarcity (e.g. eliminating slavery and child labor).
trillion annually, has attracted just US$13 billion in sustainableinvestment during the past decade. This explainer looks at the calls for a ‘sustainable blue economy’ and the role investors can play. What can investors and financial institutions do to support ocean sustainability? What is the scale of the problem?
Good engagement supports an investor’s climate ambitions and reduces their exposure to strandedasset risks.” That end point has, in fact, already been met by a growing pool of investors. It’s also a sellable GHG product for oil and gas firms.
To illustrate, BlackRock, the world’s leading investment firm, with more than $7 trillion worth of assets under management, has announced that climate will play a central role in investment considerations. A large and growing share of that investment capitol is going towards impact investments.
Policy reform, best practice and legal judgments are redefining the relationship between fiduciary duty and sustainableinvestment. In late April, the UK High Court ruled that charity trustees can consider climatechange factors when making decisions over their investments, even if it means making lower returns.
Increasing gas infrastructure must be avoided to avert dangerous climate impacts and strandedassets.”. However, investors have previously told ESG Investor that the inclusion of gas won’t change their perceptions of what constitutes sustainableinvesting. Investing in a renewable future.
The parallels between the disclosure and risk management frameworks of the TNFD and its forerunner, the Task Force on Climate-related Financial Disclosures (TCFD), are welcomed as easing the disclosure burden, but few under-estimate the challenge ahead.
Some companies will start acting and some won’t; there’s more risk of strandedassets.” What role should investors play? Where there’s a challenge (fulfilling the IMO’s 2023 decarbonisation strategy), there’s opportunity (investing in solutions that will enable the sector to achieve net zero)
The recent Intergovernmental Panel on ClimateChange (IPCC) working group III report on climatechange mitigation identified carbon capture and storage (CCS) as an integral element in reducing GHG emissions across the energy sector. What is carbon capture and storage?
With nature more broadly, there are further layers of complexity,” said Eric Nietsch, Head of SustainableInvesting, Asia, Manulife Investment Management. For investors and companies with assets within those key biodiversity areas, this raises the issue of strandedassets.
Our economic system has failed to address long-standing threats like climatechange, biodiversity loss, disease, water scarcity, and inequality. Current economic paradigms are myopically fixated on growth and this is not sustainable. However, it remains focused on profit maximization.
James Alexander, CEO of the UK SustainableInvestment and Finance Association (UKSIF), says the TPT’s proposed scope should be extended beyond large listed companies to include “large comparable private companies and unlisted firms because, realistically, these firms have the same level of impact”. .
It’s not as if there is any clamor from everyday investors to stop their fund managers from considering climatechange and other material ESG risks in their portfolios. Surveys show anywhere from half to 85% of investors indicating interest , and the percentage is consistently higher for those under 50.
Shareholders at other North American banks – including Bank of America, Goldman Sachs, Wells Fargo, Bank of Montreal and TD Bank – have also filed proposals asking for lending and financing policies consistent with the IEA’s scenario for limiting climatechange to 1.5 Risk of strandedassets . degrees Celsius.
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