Few environmental issues create as potentially significant and widespread financial threats—and opportunities—for long-term institutional investors and fiduciaries than climate change, according to a report by Innovest Strategic Value Advisors.
“Since there is now growing evidence that superior environmental performance does in fact improve the risk level, profitability, and stock performance of publicly traded companies, fiduciaries could now be seen to be derelict in their duties if they do not consider environmental performance and risk factors where they may be material,” says the report.
Factors that will likely accelerate the emergence of this “new fiduciary” paradigm even further are:
• Dramatic increases in the level of institutional investor concern—and intervention—with climate change issues and their investee companies
• Tougher legal requirements for broader and faster disclosure of company risks from non-traditional sources(e.g., Sarbanes-Oxley)
• Changing attitudes and legislation expanding the purview of legitimate fiduciary responsibility to include environmental and social performance and risk in general and climate risk in particular
The report also says that “pension fund trustees, asset managers, corporate directors and executives, and other fiduciaries will increasingly be called to account to ensure that their portfolio assets are being managed and protected prudently with respect to climate risk.”
To read the report, click here.
To comment on this story email craig.sebastiano@rci.rogers.com.