Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Climate-aware companies outperform competition

The rise of climate-related regulation and the environmental impact of climate change means “investors can no longer ignore climate change”, according to research conducted by BlackRock Investment Institute (BII). 

The firm made the case to investors following their research which compared US companies and allocated them climate scores. The study found that those with higher scores tended to be more profitable, ultimately generating higher returns.

In order to take advantage of this, BII suggested that investors integrate environmental measures such as fossil fuel consumption, water usage and carbon intensity into their appraisal of securities.

“The pace of change and the contours of the transition to a low-carbon economy may create risk for some portfolios. But, investors who understand these issues will be able to exploit the opportunities resulting from these developments,” BII senior director Ewen Cameron Watt said.

Advertisement
Advertisement

“We believe climate risk factors have been under-appreciated and under-priced because they are perceived to be distant.”

The BII report concluded that the onus now lays with investors to consider factors such as extreme weather, rising social pressure for climate awareness, technological disruption and regulatory efforts.

“Climate-aware investing is possible without compromising on traditional goals of maximising investment returns,” the report said.

“Curbing carbon emissions requires significant spending on green infrastructure and a reduction in fossil fuel subsidies. This creates large investment opportunities in areas that attract capital or industries at risk of disruption.”

Global head of impact investing Deborah Winshel said climate-aware investing is no longer just an ethical issue.

“Assessing climate risk has transitioned from a discussion reflecting investors’ values to an analysis of the risks and opportunities,” she said.

“An awareness of climate-related issues makes investors more informed and better risk managers. As regulatory and technological changes unfold, investors who anticipate these issues will be more likely to deliver competitive performance over the long term.”

Climate-aware companies outperform competition
nestegg logo
subscribe to our newsletter sign up
FROM THE WEB
Recommended by Spike Native Network
Bronson - I love you Brenton please write more....
The Patriot - It seems madness to lower interest rates when we know that we will need room to drop later as the economy slows on back of China slowing. If wages do.......
Anonymous - Does the RBA think?....
Anonymous - Bloody mad. Much cheaper and better and more fun to learn to cook for yourself. And, if you are time pressed, a crockpot set up the night before and.......