Climate Action 2009-2010
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
BUSINESS & FINANCE<br />
Institutional investors<br />
must embrace<br />
climate change:<br />
THE DUTY AND OPPORTUNITY TO CHANGE<br />
THE INVESTMENT CLIMATE<br />
© Shutterstock/Gabriel Nardelli Araujo<br />
Stephanie Feigt, Chief investment OffiCer, sAm, And<br />
Michael Riley, AnAlyst, sAm<br />
INVESTORS 72<br />
Institutional investors like pension funds should<br />
systematically integrate climate change-related risks<br />
in their investment strategies. Based on proprietary<br />
research, SAM, pioneer in Sustainability Investing,<br />
integrates sustainability trends like water scarcity<br />
or climate change in its proprietary equity valuation<br />
methodology. SAM is thus translating sustainability<br />
foresight into investment solutions with superior risk/<br />
return characteristics for clients. Given their fiduciary<br />
duty, institutional investors should expect their asset<br />
manager to incorporate climate change-related risks<br />
in their investment processes.<br />
INTRODUCTION<br />
Institutional investors have long had the responsibility<br />
to consider an array of relevant risks when making<br />
investment decisions on behalf of their beneficiaries.<br />
Failure to do so could even constitute a breach of fiduciary<br />
duty. But what happens when the relevant risks change or<br />
new risks are introduced into the investment environment?<br />
Certainly, an institutional investor’s duty will have to shift<br />
to take these new risks into account in order to act in the<br />
best interests of their beneficiaries. Acting in the best<br />
interests of beneficiaries within institutional investing is,<br />
to a large extent, concerned with the financial interests<br />
of beneficiaries. If a new risk emerged that had critical<br />
financial and economic impacts to assets and reached<br />
every edge of the global economy, that risk would need to<br />
be actively managed by institutional investors.<br />
“<br />
Significant greenhouse<br />
gas emitters may have to cope<br />
with regulation strict enough<br />
to facilitate a reduction in<br />
emissions near 80 per cent<br />
by 2050, while the physical<br />
impacts of severe weather<br />
events and rising sea level<br />
will hit other sectors such as<br />
agriculture and insurance<br />
“<br />
THE CLIMATE AS A GAME CHANGER<br />
<strong>Climate</strong> change presents exactly such a risk that is<br />
changing the investment and business environment<br />
and should draw the attention of institutional investors.<br />
V I SIT: WWW.CLIMATEACTIONPROGRAMME.ORG
Change language