New Guide Helps Investors Assess Financial Risks and Opportunities from Global Warming

New Guide Helps Investors Assess Financial Risks and Opportunities from Global Warming

A new investor guide outlines specific strategies for addressing the financial risks and investment opportunities posed by global warming. The guide identifies actions that pension plans, fund managers, and companies can take to address climate risk, and also recommends that investors support government action to reduce investor and business uncertainty on global warming.

The Investor Guide to Climate Risk was commissioned by Ceres, a coalition of investment funds and environmental groups, and written by the Investor Responsibility Research Center, an investor advisory firm. The guide was commissioned on behalf of the Investor Network on Climate Risk (INCR), a new alliance of institutional investors dedicated to promoting better understanding of the risks of climate change among institutional investors. Ceres serves as the INCR Secretariat.

The guide is intended to help investors implement the recommendations of the Investor Call for Action on Climate Risk signed by investor leaders including public pension, labor pension fund, and foundation endowment trustees representing over $800 billion in assets.

According to the author of the Guide, emerging limits on global warming pollutants (carbon dioxide and other greenhouse gas emissions), both in U.S. states and worldwide, are creating new pressures to reduce emissions and are opening new markets for cleaner technologies-creating both risks and opportunities for companies and their investors.

The guide identifies three core actions to address climate risk: assessing the risks, disclosing the risks, and investing in solutions, such as cleaner, more energy efficient technologies to achieve absolute reductions in greenhouse gas emissions. Ten key steps are aimed at three main groups: Plan Sponsors, for pension plans and endowments and their investment consultants; Fund Managers for "buy side" investment managers and "sell side" brokers and securities analysts; and Corporations for boards of directors, CEOs and top executives.

Mindy Lubber, executive director, Ceres, said: "Fundamental changes must be made in our industries to limit the risks posed by climate change. Investors are now raising questions that need to be asked, and insisting on the analysis that will protect our economy and our investments over the long-term. This guide is a useful first step in beginning to quantify the risk exposure as a part of routine financial analysis, and in doing so encourage the changes that are needed."

Doug Cogan, IRRC and author of the guide, said: "Analyzing climate risk is a new and important challenge for investors, fund managers and corporations. This guide is intended to show how they can coordinate their efforts to achieve better disclosure, better outcomes and more certainty in addressing what until recently was considered an 'off-balance sheet' risk."