The World Resources Institute and Coalition for Environmentally Responsible Economics recommend investors "assess climate risk posed to their investments and include climate-risk adjustments when valuing companies due to climate-change policies," according to a report released today by the groups.
The report, "Framing Climate Risk in Portfolio Management," is designed "to help investors analyze business risks and regulatory uncertainties associated with global climate change" and their impact on corporate value, the report said.
"Investors should be assessing which companies are best positioned to adapt to present and future climate policies in the U.S. and abroad," Fred Wellington, WRI senior financial analyst, said in the report. "Climate change is increasingly being viewed by leading companies as a competitive issue, and investors should be assessing climate competitiveness in their investment decisions."
Mindy S. Lubber, president of the coalition, also known as Ceres, said in the report, "Financial analysts and stock-portfolio managers who are not factoring carbon costs or potential carbon costs into their assessments of companies and entire sectors are not adequately serving their clients. Whether it's a new coal-fired power plant or a new line of engines for the airline or railroad industries, carbon emissions and carbon costs are an important factor companies and investors will need to consider before making such capital investments."
World Resources Institute is devoted to environmental and financially related issues. Ceres is a coalition of investment funds, environmental organizations and public-interest groups working to advance corporate environmental responsibility.