Ceres launches Investors Guide to Climate Risk
London, 30 July 2004: A new guide has been published, setting out advice on addressing the financial risks and opportunities associated with climate change, and aimed at fund managers and company directors.
The Investor Guide to Climate Risk was commissioned by Ceres, a Boston-based coalition of investors and environmental groups, on behalf of a newly formed alliance of investors, known as the Investor Network on Climate Risk. It was written by the Washington-based Investor Responsibility Research Centre, which provides advice to shareholders.
Writing at the start of the guide, Ceres’s executive director Mindy Lubber says, “the investment risks and opportunities posed by climate change are vast,” and come in the form of both policy and physical risks.
“The guide’s intent is to help lay the groundwork and build a coordinated approach to mitigating climate risk,” she continues, but adds that “on an issue as complex as this, [it] is merely a starting point for a sustained effort”.
The guide identifies three core activities that should be carried out ” an assessment of the risks related to climate change, disclosure of those risks, and investment in solutions ” each of which is broken down into a series of key steps.
Advice on implementation is given for three specific sectors:
– pension plans and their investment consultants;
– fund managers and stockbrokers; and
– directors and chief executives of companies.
The 10 Key Steps
1. Expert advice
Find experts to raise awareness, assess climate risks and convey fiduciary duties to plan beneficiaries, investment consultants, fund managers and portfolio companies.
2. Risk assessment
Assess physical and policy risks of climate change in evaluations of companies, industry sectors, investment portfolios and property holdings.
Join the Investor Network on Climate Risk and engage with others to promote climate risk assessments, greenhouse gas (GHGs) emissions disclosure and responsible public policy.
4. Public statement
Declare that climate change poses fiduciary and financial risks to be addressed through research, corporate engagement and long-term investment strategies.
5. Public disclosure
State methods to assess and address climate risk in plan documents and require companies to identify material risks of climate change in securities filings.
6. Emissions accounting
Ask companies to disclose emissions based on the Greenhouse Gas Protocol, and to account for GHG emissions from products and property holdings.
7. Stakeholder dialogue
Adopt proxy voting guidelines to urge corporate action on climate change, and maintain an active dialogue with beneficiaries, fund managers and companies.
8. Investment strategy
Match long-term objectives with reduced climate risk exposure to optimise investment returns, and engage fund managers and companies to adopt best practices.
9. Clean energy
Direct investment capital into emerging clean energy technologies and promote energy efficient products and building practices.
10. Government action
Support government actions to promote investor certainty, including mandatory policies to achieve absolute reductions in GHG emissions.
Updated 25 August 2004