UNEP FI Asset Management Working Group The - UNEP Finance ...

Non-green asset managers could be sued: U.N. report
Tue Jul 14, 2009 11:08am EDT
LONDON (Reuters) - Investment advisors and asset managers could be sued for negligence if they do not
consider the environment and other social issues when making investment decisions, a United Nations report
said on Tuesday.
Money managers have a legal responsibility to raise environmental, social and governance (ESG) issues when
tendering investment and advising clients, a law expert and one of the report's authors said.
"(There is a) very real risk that (the advisor) will be sued for negligence on the grounds that they failed to
discharge their professional duty of care to the client by failing to raise and take into account ESG
considerations," said Paul Watchman.
The report was produced by the Asset Management Working Group of the U.N. Environment Programme's
Finance Initiative (UNEP FI), a partnership between the United Nations and more than 180 financial institutions
with over $2 trillion under management.
"Responsible investment, active ownership and the promotion of sustainable business practices should be a
routine part of all investment arrangements, not an optional add on," said Steve Waygood, head of sustainability
research and engagement at Aviva Investors, who also worked on the report.
The report said that in the wake of the economic downturn, investment professionals now had a central role in
using global economic stimulus money, estimated by HSBC to be around $2.8 trillion, to fund the transition to a
low-carbon and resource efficient 'green' economy.
"As investors return to the markets, the question remains whether the funds will go to the brown economy of
yesterday -- or to a new green economy," said Achim Steiner, head of UNEP.
But only around $430 billion, or 15 percent of these funds have so far been earmarked for funding the green
infrastructure, according to research published by HSBC Global Research in February.
One author said the worst financial and economic crisis in generations paled in comparison to what he called a
looming "natural resources crisis" that would require investment professionals to rethink where they put clients'
money.
Last year, environmental group WWF said investors faced increased risk from companies that invested in
unconventional fossil fuels without considering pending climate regulations or greenhouse gas emission permit
costs in a carbon-constrained economy.
(Reporting by Michael Szabo; Editing by Michael Kahn and Jon Boyle)
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