Resource / 05 Aug, 2014
Growing Support Helps Investors Identify Climate Risk

Shareholder action to ensure that their investments are in sustainable businesses and are protected against climate change risk is a rising global phenomenon. Informed shareholders are insisting that companies provide transparent reporting of the bottom line risks they face. This includes everything from climate change impacts on customers to threats to supply and production chains to the problem of stranded fossil fuel assets as governments ratchet down greenhouse gas emissions through new laws, policies and incentives.

Ceres, an investor group for leadership in sustainability, provides a detailed and interactive site that tracks shareholder resolutions from its network of members on sustainability-related issues that companies are facing. These focus on climate change, energy, water scarcity, and sustainability reporting.

A recent report from theenergycollective think tank analyses this data and gives a quick guide to shareholders who want to take similar actions to defend the sustainability of their investments. 

Policies to reduce greenhouse gas emissions are increasing, which has attracted the attention of global risk ratings firms. For example, a research paper entitled Carbon Constraints Cast A Shadow Over The Future Of The Coal Industry recently published by Standard & Poors’ coal analysts with input from Carbon Tracker and Aviva explores the impacts of these changes on the future debt ratings of the coal industry

To avoid much worse climate change, global emissions need to peak in the next decade and the world needs to become carbon neutral as early as possible in the second half of the century. This means it is not possible to continue burning all the fossil fuels left in the ground.

In a World Bank blog, in July, prominent investors also explained the need for putting a price on carbon emissions. Read the full post.

To learn more about investor action on climate change and sustainability:

Caring for Climate is a United Nations Global Compact initiative that seeks to mobilize a critical mass of companies around the world to demonstrate leadership on climate action and to become responsible advocates in global and local policy discussions in support of a global climate change agreement in 2015.

In the lead up to September's UN Secretary-General’s Climate Summit, the UN Global Compact and Caring for Climate partners — CDP, The Climate Group, UN Foundation and WBCSD — are calling on companies to demonstrate leadership in pricing the cost of carbon emissions as a necessary and effective measure to tackle climate change.

The Business Leadership Criteria on Carbon Pricing have been developed to inspire companies to reach the next level of climate performance, and to give recognition to businesses that are at the forefront of advocating a price on carbon. The Business Leadership Criteria complement a Statement on Putting a Price on Carbon developed by the World Bank Group and other partners calling for countries and companies to demonstrate strong global support and action toward pricing carbon.

Other useful information:
United Nations Climate Summit, 23 September 2014.
                                                                                                                                                                                                          Photo by Lending Memo