{"id":26622,"date":"2015-12-07T09:03:20","date_gmt":"2015-12-07T09:03:20","guid":{"rendered":"http:\/\/www.climatechangenews.com\/?p=26622"},"modified":"2016-02-08T13:17:58","modified_gmt":"2016-02-08T13:17:58","slug":"in-paris-polluters-in-focus-as-investors-spurn-climate-risk","status":"publish","type":"post","link":"https:\/\/www.climatechangenews.com\/2015\/12\/07\/in-paris-polluters-in-focus-as-investors-spurn-climate-risk\/","title":{"rendered":"In Paris, polluters in focus as investors shun climate risk"},"content":{"rendered":"

So far, the most visible investor impact of climate change is divestment. But a bigger, quieter shift has started, to low carbon, and “climate aware” polluters<\/strong><\/span><\/p>\n

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(Pic: UNFCCC\/Flickr)<\/p><\/div>\n

By Gerard Wynn<\/a> in Paris<\/strong><\/p>\n

High-carbon companies may lose the support of major, long-term investors, if they push back against growing pressures to disclose their carbon emissions, and to change their boards and corporate direction.<\/strong><\/p>\n

To date, the most visible investor impact of climate change has been a fossil fuel divestment movement, targeting coal stocks. But a bigger, quieter shift may have started, away from less engaged polluters, towards lower carbon, and more “climate aware” higher carbon, companies.<\/p>\n

The question is how quick the shift is.<\/p>\n

Businesses, investors and regulators are gathered in Paris on the side lines of a UN conference, where countries are meant to reach a new global climate agreement this week.<\/p>\n

Investors meeting in Paris claim that their attitude to climate risk is changing. They point to the following pressures.<\/p>\n

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IN DEPTH:<\/strong> Breaking energy and carbon analysis<\/a><\/p><\/blockquote>\n

In a worst-case scenario, the most polluting companies might see a vicious cycle of exiting responsible investors, leading to higher costs and lower returns, with the opposite trend in green technologies.<\/p>\n

What is causing the change?<\/p>\n

First, there is growing pressure for both companies and investors to measure their carbon footprints. Notably, the global Financial Stability Board (FSB) last week said it would standardise rules for companies<\/a> to report their carbon emissions and climate exposure. While the FSB code would be voluntary, it would be effectively mandatory if widely adopted.<\/p>\n

Regulators are motivated to head off a climate crisis, and avoid the kind of mispricing of mortgage assets that led to the global financial crisis.<\/p>\n

The FSB follows France, which earlier this year passing an \u201cEnergy Transition Law\u201d rule, requiring companies, their lenders and investors, to disclose climate risks. Sweden\u2019s minister for financial markets said in Paris last week his country would legislate, too, if the private sector failed to regulate itself.<\/p>\n

Second, there are new tools in the market for investors to re-allocate capital, where the classic example are green bonds. These are a pin-prick in the global bond market to date, with $66-532 billion of issued green bonds outstanding, depending on how these are defined, compared with a global bond market worth tens of trillions. Nevertheless, the green bond market is growing rapidly.<\/p>\n

Third, investors are increasingly sharing best practice, through groups such as the Carbon Disclosure Project, the Institutional Investor Group on Climate Change (IIGCC) and Ceres.<\/p>\n

View my Flipboard Magazine.<\/a>