Take Control! Your investments can change climate change
This week the UK’s largest listed asset manager, Schroders, issued a pretty serious warning on climate change. With global temperatures set to rise 4°C, well above the target set in Paris in 2015, they cautioned investors that a lot of their cash is at risk.
Schroder’s just-launched Climate Change Dashboard measures progress towards a decarbonised world because…
Climate change will be a defining driver of the global economy, society and financial markets over coming years, decades and beyond. While the issue has moved up investment agendas, the change in strategies has not kept pace.
Andy Howard – Schroders, Head of Sustainable Research
And Schroders isn’t alone. Several other big asset managers including BlackRock and Legal & General Investment Management have warned that investors need to do more to protect their investments from global warming. And I couldn’t agree more.
Why you should worry about where you put your money
To put it simply, climate change is a long-term risk that will play out – and erode economic output and value – over many years. To any investor this should be worrisome, but particularly those who are thinking about their pension investments.
Extreme weather, droughts and crop failures will result in severe physical losses – and that’s not to mention mass migration and political instability that goes with it. Of course there are a number of industries, particularly those who large carbon footprints, that will face an inevitable decline. And many companies will simply not survive unless they start developing climate-proof business strategies – TODAY.
Climate-aware investors, please stand up…
But before we descend into a world of doom and gloom, let’s take control. For us climate-aware investors there are lots of smart moves we can think about making.
First and foremost we should consider staying away from investing in fossil fuel companies. As Bill McKibben – America’s leading environmental activist and founder of grassroots climate group 350.org – so succinctly puts it:
It does not make sense to invest my retirement money in a company whose business plan means that there won’t be an earth to retire on.
Bill McKibben – 350.org, Founder
And it’s getting easier for us as investors to identify the kind of companies we should be staying away from. For example, I recently came across coalexit.org who have pulled together a fantastic database on the 120 major companies building new coal power plants worldwide.
Let’s be frank. New coal-fired power plants are going to harm the climate for decades to come, potentially pushing the world into a climate collapse. Yes, climate collapse!
Did you know that there are 850 new coal plants are in planning in 62 countries? For the activists in us, it’s time to push back. So I highly recommend checking out their database of major companies building new coal power plants worldwide, not least to make sure you aren’t directly or indirectly investing in these companies.
While I am at it, I would also recommend checking out 2 degrees of separation – a really useful report ranking 69 of the biggest oil and gas industry companies according to the extent of their exposure to the low-carbon transition. It’s quite sophisticated but it’s this kind of analysis that we need to identify the winners and losers of the future.
With such great resources, ignorance on climate change is certainly not bliss – nor an excuse!