Climate change is being felt in a corner of the world different from where one might expect: Wall Street, where some of the biggest investors are starting to take action.
Climate change is being felt in a corner of the world different from where one might expect: Wall Street, where some of the biggest investors are starting to take action.
That’s the finding of a first-ever survey of institutional investors conducted in part by the McCombs School of Business at The University of Texas at Austin. From banks and insurers to pension and mutual funds, 97% of 439 respondents believe global temperatures are rising. More than half say climate risks are already a factor in their investment decisions, according to “The Importance of Climate Risks for Institutional Investors” published in the March 2020 issue of The Review of Financial Studies.
“These investors have accepted that climate change is happening,” said Laura Starks, finance professor at Texas McCombs, who designed the survey with colleagues Philipp Krüger of the University of Geneva and Zacharias Sautner of the Frankfurt School of Finance & Management. “They’re trying to come to terms with how it’s going to affect the risk and return of their portfolios.”
The survey also reveals how institutions are starting to act. Their tactics range from asking companies to catalog carbon emissions to backing shareholder resolutions. If institutions are not satisfied with executives’ responses, a few are divesting their shares.
Read more at University of Texas at Austin
