Climate Action 2017-2018

FINANCE
In some instances, taking
sustainability into account can
actually enhance corporate financial
performance.
Hurricane Maria near Puerto Rico.
Photo by Stuart Rankin/flickr
Back-to-back billion-dollar natural
disasters from South Asia to south Texas,
from hurricanes in the Caribbean to
wildfires in the Rocky Mountains, show a
clear pattern of high cost.
Chief investment officers and individual
investors are taking note. Mainstream
financial players including former New
York Mayor Michael Bloomberg are calling
for corporations to take more action. A
global task force set up by the G20 top
industrialised nations – the Task Force on
Climate-Related Disasters (TFCD) – has
developed a voluntary framework for
companies to disclose the financial impact of
climate-related risks and opportunities. The
TFCD has drawn support from more than
100 companies with US$11 trillion in assets.
And yet the battle is far from won:
most fund managers still chase the
short money. But the trend is in the right
direction, especially when asset owners
apply pressure, as they have in 2017. A
case in point: 62 per cent of ExxonMobil’s
shareholders voted to instruct the oil
giant to report on the business impact of
global measures to limit warming to 2˚C
above pre-industrial levels. This followed
similarly successful shareholder votes
at Occidental and PPL, a large utility
holding company.
Investment heavyweights Blackrock,
Vanguard and State Street – which
collectively own about 18 per cent of
ExxonMobil – all reportedly voted for the
resolution, which was a vote for longterm
protection for investors’ capital. The
vote was also in line with Blackrock CEO
Larry Fink’s 2016 demand that company
CEOs manage for the long term, even
though Blackrock and other firms had
been reluctant to vote against company
management, especially on issues related
to climate change.
These investment houses are not alone,
and WRI is part of this transition. More than
300 companies around the world have
committed to setting targets to reduce
climate-warming emissions in their value
chains consistent with the best climate
science as part of the Science Based
Targets initiative. The Institute’s Sustainable
Investing Initiative offers tailored data,
research and peer-to-peer learning to
accelerate the shift toward investment that
integrates ESG factors from the start.
Ultimately, we should settle for nothing
less than 100 per cent of investors
taking ESG into account when making
investment decisions. We are not there
yet, but by sharing knowledge about the
consequences of failing to act now to deal
with projected climate impacts, there is
a better chance of persuading portfolio
managers to think for the long term – just
as many investors already do.
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