Sustainable Investing - the revolution begins (2)

Ian Deacon
English Section / 11 noiembrie

EDUCATION-ASSET CLASS (a class for Environmental, Social and Governance ["E.S.G."] investors)

The Chartered Financial Analysts institute ["C.F.A."] now has a certificate in E.S.G.

Investing which is attracting a lot of interest from students. The course was first introduced in 2019 by the CFA Society of the U.K. but is now marketed in financial hubs all over the world. This growth is very timely because ,according to Bloomberg estimates, global E.S.G. assets are on track to hit $53 trillion (£39Trillion) by 2025 accounting for over one third of the $140 trillion in total assets under management.

The CFA course is designed to assist investors in assessing and verifying the sustainable element of potential investments. For example, 45% of valuation experts believe that a lack of standardised and recognised measuring system is the biggest threat to ESG disclosures for businesses and this course agrees to address this issue.

REPORTING CLIMATE CHANGE ISSUES

With the support of Mark Carney the former Governor of the Bank of England is promoting the Task Force on Climate-Related Financial Disclosures ["T.C.F.D."] and within

two years the U.K. government could make it obligatory for all companies to disclose the risks

(and opportunities) presented to the business by climate change .

UNTIL YOU KNOW HOW A COMPANY IS EXPOSED TO CLIMATE CHANGE AND HOW IT IS MANAGING THAT EXPOSURE, YOU CANNOT PROPERLY ASSESS ITS LONG-TERM FINANCIAL RESILIENCE .That is the case being put by the T.C.F.D. for disclosure.

According to the T.C.F.D. 384 companies in the U.K. are following their guidelines including Barclays, BP and AON.

The reasoning behind this move to a law obliging companies to make disclosures of their risks to climate change is that the benefit to be gained is "better access to capital by increasing investor and lender confidence " It is good for business and good for the planet.

INVESTING

So, now there will be the essential tools that investors need -Education and Information.

So that we may understand the above references to risk from climate change to a business let us take the example of an international insurance company insuring properties and other risks in a vulnerable territories in the front line of suffering catastrophic events caused by increasing temperatures such as drought and floods, they are exposed to increased risk of claims which will impact unfavourably on their profits and returns for shareholders.

Fossil fuel businesses will suffer considerable reductions in their traditional business from Oil and Gas as consumers switch to electric vehicles and heating from renewable sources they may even suffer years of losses ,so investors will disappear and prices will fall.

This is perhaps the largest change in the investing industry ever.

SOURCE : Sunday Times and Internet

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