Nearly half of global money managers are making investment decisions without factoring in risks or opportunities associated with climate change, according to a survey released on Wednesday by a coalition of environmentalists and investors.
A related report recommended that money managers and institutional investors do climate risk assessments on all investments and encourage the U.S. Securities and Exchange Commission to encourage full disclosure of climate risks.
“This is about significant business issues that affect our portfolios,” Jack Ehnes, chief executive of the California State Teachers’ Retirement System told reporters in a teleconference about the survey. “Certainly leaving the most recent economic crisis with a deeper understanding of risk, I would think it would be incumbent on everyone to embrace (climate) issues.”
The survey of the world’s 500 largest asset managers by Ceres, a Boston-based coalition of environmentalists and investors, found 44 percent of the respondents did not consider climate risks in their investment decisions. They did not see risks as financially material.
Industries that face the most financial risk from climate change and current and future limits on greenhouse gas emissions include electricity generators, automobile manufacturers and insurance companies, it found.
Asset owners, such as pension funds and other institutional investors, were not asking their asset managers to analyze the risks, or were only just beginning to raise the subject, the survey found.
Alexis Krajeski, a sustainable investment expert in London at global asset management company F&C Management Ltd, said money managers could stand to lose if they do not analyze opportunities and risks linked to climate change.
Opportunities could include investments in companies that are responding to greenhouse gas regulations by helping heavy industry to reduce emissions.
“In order to capitalize on climate-related opportunities and avoid losses linked to climate risk, we need to identify the winners and losers,” she said.
Pension funds and other investors led by Ceres and holding more than $1 trillion in assets, have been pressing the SEC to require companies to disclose climate-related risks.
SEC Commissioner Elisse Walter, one of five members who makes decisions on federal securities rules, has said she believes it is time for the regulators to issue so-called interpretive guidance on climate risks.
