All successful venture capitalists know that if you want to make a smart investment, you must take into account all possible factors. With that in mind, it seems that the world of finance is now waking up to the fact that climate change must be considered when it comes to deciding whether investments will have relevance in the future. According to a Mercer survey, 12 institutional investors (who are worth trillions of dollars) now factor climate change into their investment decisions.
According to the survey, 50% of the investors decided, in the wake of the Durban Climate Conference, that climate change should be considered in future risk management and asset allocation processes.
Describing climate change as “a significant investment risk for the foreseeable future”, the survey noted that 50% of project partners have undertaken or plan to make changes to their actual asset allocations. Meanwhile 80% have or will increase their engagement with companies and policy makers in regards to climate change. On top of that, 50% of the participants plan to review (or have already reviewed) climate risks within climate-sensitive asset classes, while a third of participants have begun (or plan to) allocate more to “climate sensitive assets” such as real estate, infrastructure and private equity.
Speaking about the study, Mercer’s Global Head of Responsible Investment Jane Ambachtsheer said: “As expected, priorities and areas of focus differ among the partners, and in some cases, the findings have been used to support decisions which were already under consideration, such as an enhanced allocation to infrastructure investments.”
The Environment Agency Active Pension Fund also commented on the report, saying: “The EAAPF plans to use this project and its findings to directly feed into the fund’s regular investment strategy reviews by monitoring the funds exposure to climate change risk factors and strategic planning with regards to asset allocation.”
Now someone tell Mitt Romney – who is a successful venture capitalist – that he should at least start acknowledging climate change and think about factoring it into his future investments.