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Shift to a Low-Carbon Economy? Global Investors Say Yes

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Climate change is having a direct impact on investors across the globe, in some cases prompting divestments, results from a new survey show.

The third annual Global Investor Survey on Climate Change report, which reveals investment practices of 37 asset owners and 47 asset managers, showed that the majority of asset owners—81%—see climate change as a risk or opportunity across their entire investment portfolio.

Climate change concerns prompted an increase in the number of asset owners who avoid a particular investment or make a divestment by 23% in 2012, up from just from 9% in 2011.

“We divested from a company when we came to the conclusion that they were no longer part of the transition to a low-carbon.”
–European equity managerThe report also found that 70% of asset owners and 60% of asset managers reported low carbon investments, such as solar energy or fuel-efficient equipment services, in 2012.

One North American equity manager quoted in the survey said, “Starting in late 2012, we divested from companies for which the majority of operations were in the tar sands, as well as utilities whose reliance on coal was greater than the national average. We also stated that we would not invest in coal companies.”

Another European equity manager who responded to the survey stated, “We divested from a company when we came to the conclusion that they were no longer part of the transition to a low-carbon economy as their portfolio of carbon-based fuels/assets began to rise materially.”

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While the responses from the two equity managers above come from companies whose profiles have a specific sustainability or climate change theme, even mainstream investors mentioned veering away from high-carbon investments.

“We are highly unlikely to participate in unlisted equity investments that are high carbon,” said one mainstream Australian asset owner.

The groups that coordinated the survey, the European Institutional Investors Group on Climate Change, the North American Investor Network on Climate Risk (INCR), the Australia/New Zealand Investor Group on Climate Change and the Asia Investor Group on Climate Change, said the findings were “encouraging” but that climate change policy uncertainty remained.

“We are pleased that global investors are continuing to prioritize climate change as a material investment risk and source of investment opportunity,” said Chris Davis, Director of Investor Programs at Ceres, a US-based sustainability group that coordinates the INCR.

“But much work remains to be done, especially in the U.S.,” Davis continued, “to fully integrate climate risk into investment decision-making, and to advance public policies that will accelerate more low carbon investment.”

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