Innovest just released an important report on Carbon Beta and Equity Performance that directly links a companies response to the risks and opportunities driven by climate change with their competitiveness and financial performance.
The report talks about the consequences of regulatory and public response to climate change that have the potential for enormous financial impact. Among the factors that will affect a company’s risk are:
- Exposure to risk based on their geographic footprint (the impact of regulations in the countries and regions that they operate)
- Their ability to improve operations to meet regulation
- Their ability to seize climate-driven opportunities
- Â Their ability to manage and reduce risk exposure
The report specifically speaks about the awareness of the institutional investor to the upside of climate change on company performance. In the past, a company’s investment in environmental issues was seen as wasteful or harmful to their competitive and financial performance. That is now changing as research evidence begins to amass to make a strong link between environmental performance and financial performance.
Investors can send a strong message by investing in companies that take climate change seriously. Produce significantly changed company behavior by investing in companies that are changing to reduce their impact on the environment, and profit significantly while doing good.
