Ethical investment could help tackle climate change

More education and implementation of ethical investment could help to tackle the growing issue of climate change, FairPensions has claimed.

According to a recent report by the campaigning organisation, which surveyed 100 leading investment fund managers, 89 per cent of respondents said that climate change was either important or very important when it came to their investment research.

However, despite this level of awareness, the survey also highlights some of the barriers facing investment fund managers when it comes to ethical investment.

According to the survey, the low current carbon price was the most significant barrier to the incorporation of climate change risks and opportunities into investment analysis and decision making, as 63 per cent of fund managers cited this as a barrier.

Another hurdle facing fund managers is the fact that they feel under little pressure by clients to address the issue of climate change when it comes to assessing investments.

However, despite the fact that various fund managers are tackling the issue at hand differently, FairPensions believes that with a few alterations, ethical investment could go a long way towards combating climate change.

Recommendations made by FairPensions include the need for investors to give clear instructions to fund managers when it comes to the risks and opportunities associated with climate change.

The report also suggests that guidance from the Government could encourage companies to report on their exposure to climate change risks and take action to reduce their exposure.

Finally, FairPensions believes that fund managers should start focussing on, "longer tern trends (such as expected future carbon prices) in anticipation of clients' increasing assertiveness about their longer-term interests, and as a means of rebuilding client and public confidence in themselves and the financial services sector."

© Fair Investment Company Ltd