Investor Survey Shows Sensitivity to Climate Change Risks

Investor Survey Shows Sensitivity to Climate Change Risks

survey published by the Global Investor Coalition on Climate Change – a collaboration among four regional climate change investor groups – reports on trends among asset owners and managers. The survey elicited information on the degree to which investments are being directed away from entities that are viewed as higher risk, either because of likely increases in climate change regulation or concern about climate change-related operational impacts.

Respondents included 37 asset owners and 47 asset managers with aggregate assets in excess of $14 trillion in ten countries. A list of survey respondents is available at page 50 of the report. Among the key findings of the report, more than half (56%) of asset owners conducted formal or informal climate change risk assessments of their portfolios, and 45% of asset owners who did so made changes to their investment strategy in 2012 in response to such a climate change risk assessment. Of the nine risks surveyed, the top four cited were regulatory changes, government support programs, physical impacts, and corporate governance. According to the survey, the majority of respondents (81% of asset owners and 68% of asset managers), view climate change as a material risk across their total portfolio and reference it in their investment policy.

While these numbers seem significant, the report’s introduction notes that this trend is still emerging: “while members of the investor networks surveyed continue to show a strong commitment to addressing climate change in their investment activities, translating that commitment into investment decisions that reduce climate risks to portfolios and leverage climate-related investment opportunities remains a challenge.”

Jane C. Luxton, Esq.

Read more at from Pepper Hamilton LLP's Sustainability, CleanTech and Climate Change Team.

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