Published on January 12th, 2010 | by Guest Contributor1
75% of Asset Managers Don’t Consider Global Warming
Wall Street investing is moving toward a new kind of green- the environmental kind rather than just the dollar bill. A new article from Bloomberg, one of the top financial destinations on the web, talks about a growing emphasis on climate change considerations. According to a recent CERES survey, close to 75% of asset managers do not take global warming into account when analyzing a company. Close to 50% said that climate change is not relevant to investment decisions. CERES sent surveys to the 500 managers who oversee the most assets, receiving 84 surveys back, representing the managers of $8.6 trillion.
According to their website, “Ceres is a national network of investors, environmental organizations and other public interest groups working with companies and investors to address sustainability challenges such as global climate change.” Their mission is: Integrating sustainability into capital markets for the health of the planet and its people.
And it sounds like they are gaining ground.
Socially Responsible Investment (SRI) and evaluating businesses based on a triple bottom line both have niche influence and are growing as factors in the recalibrating financial world, but seeing a report by Bloomberg that notes its influence in the overall market is significant.
“The subprime meltdown was about ignoring risk. We’re at the early stages of integrating climate risk and other sustainability risk into financial management,” said Mindy Lubber, president of the Boston-based CERES.
Bloomberg notes that pension funds, governments and private institutional investors are starting to request assessment of climate risk in due diligence reports, responding to the desire of investors and shareholders to understanding the effect of climate chance on profits.
The move stems as much from the growing financial implications of climate change as from any environmental-consciousness in the financial world. New laws and regulations based on climate change are increasing costs for companies that produce high emissions, as well as adaptations to changing market attitudes and desires.
Evaluating the green credentials and environmental awareness of a company is not a new concept- funds like Green Century have been doing it for decades. Founded in 1991 by a group of non-profit environmental advocacy organizations,
Green Century funds has been making investments based on 3 strategic principles:
1. Invest in companies leading the way toward a greener future.
2. Avoid investing in companies that do not meet Green Century’s environmental criteria.
3. Use shareholder advocacy to attempt to influence corporate behavior.
Clearly ahead of their time, having been at this for almost 20 years.
While Wall Street and investment guidelines in general may still be years away from utilizing proactive shareholder advocacy to influence corporate behavior, the growing push for investment dollars in general to go toward green companies has the potential to increase both active investment in greener companies and reduce investment in those that drag their heels on green compliance or action.