INVESTMENT IN A NEW CLIMATE

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07 Apr INVESTMENT IN A NEW CLIMATE

Financial Times features an article this week by Dan McCrum on investment in the climate change era, which looks at the ways investors take climate into account when deciding what to buy and sell.

Jeremy Grantham, co-founder and chief investment strategist at the asset manager GMO argues that Trump’s plans to roll back the Clean Power Plan, Obama’s flagship climate policy, will only galvanise the response to climate change.

While concerns over climate change were long viewed as the reserve of specialised ESG teams, the consequences for financial stability from rising global temperatures are now increasingly clear, according to McCrum. In September, Mark Carney, governor of the Bank of England warned that “changes in policy, technology and physical risks could prompt a reassessment of the value of a large range of assets as costs and opportunities become apparent.”

As such, both retail and institutional investors are divesting away from fossil fuels, with over $5 trillion committed at the end of 2016. However, as Fred Samama at Amundi points out, clients can be caught between two extremes. Those who divest from fossil fuel companies must then consider other heavy emitters such as airlines or electrical utilities, resulting in the investment universe becoming smaller and smaller.

Keep reading on the Financial Times…