Handbook on Climate-Related Investing across Asset Classes

Learning, Practice, Results. In Good Company Handbook on Climate-Related Investing across Asset Classes Institute for Responsible Investment Table of Contents Acknowledgments ......................................... 2 Introduction ....................................................3 Cash and cash equivalents .............................5 Fixed-income ................................................13 Public equities ..............................................19 Private equity ............................................... 28 Real estate .....................................................33 Infrastructure ................................................38 Commodities ...............................................42 Hedge funds ................................................49 Appendix: Links to organizations and referenced readings ...............................52 For more information contact: David Wood, Director david.wood.4@bc.edu 617.552.1140 This piece is printed on Mohawk Via 100% post consumer waste paper manufactured with windpower and is Green Seal and FSC certified. The print facility has a 100% recycling policy and uses UV Environmental Inks with no VOCs. Boston College Center for Corporate Citizenship • www.bcccc.net Climate change is among the most important issues addressed by today’s responsible investment universe. Every asset class offers investors an opportunity to pursue climate-friendly investments, to mitigate exposure to climate risk, and to engage stakeholders to improve climate-related performance across the range of investment opportunities. Institute for Responsible Investment • 1 Acknowledgments This project was made possible through the generous support of the Brooks Family Foundation. The principal authors of this handbook were Valerie LaVoie and David Wood of the Institute for Responsible Investment at the Boston Col-lege Center for Corporate Citizenship. We received help from a number of people, for which we are very grateful. Steve Lydenberg of Domini Social Investments and Belinda Richards of the IRI pro-vided valuable direction and insight throughout the writing and editing of the handbook. Lisa Hagerman of the Institute for Responsible Investment’s More for Mission Campaign Resource Center offered important feedback throughout the editing process. Along the way, we also received insight and assistance from: Damon Barglow, Rob Berridge, Arthur Campbell, Derek Casteel, Lily Donge, Steve Falci, Paul Hilton, Matthew Hodgson, Leslie Lowe, Christopher McKnett, William Page, Gary Pivo, Jenny Russell, Bruce Schlein, Kate Sheppard, Val Smith, Stephen Viederman, Mike Wallace and Sonia Wildash. Thanks to them all. The mistakes that remain are ours. 2 • Boston College Center for Corporate Citizenship • www.bccorporatecitizenship.org Introduction Responsible investment – understood as the incorporation of environmental, social, and governance (ESG) information into investment analysis – is a disci-pline that allows investors to: • Better assess long-term risks and opportunities in their portfolios; and • Better align their investment strategies with opportunities to create long-term wealth for investors and society alike. It is a tool for investors who seek to improve long-term financial returns through enhanced ESG analysis. It also appeals to mission or impact investors, who seek to achieve defined social and/or environmental goals while achieving targeted rates of return. In both cases, investors use responsible investment as a tool to improve their ability to achieve their goals. Climate change is among the most important issues addressed by today’s re-sponsible investment universe. The physical risks of climate change, the likeli-hood of major changes in political and regulatory investment environments as a result of climate change, the opportunities associated with a radical global trans-formation to a low-carbon economy – these issues create far-reaching implica-tions for investors as they make decisions about their investment strategies, and as they evaluate particular fund managers and investment opportunities. New ideas, products, and methods have entered the market to address the long-term implications of climate change. This short handbook takes as its premise that a climate lens reveals risks and opportunities across all elements of an investor’s portfolio. Every asset class of-fers investors an opportunity to pursue climate-friendly investments, to mitigate exposure to climate risk, and to engage stakeholders to improve climate-related performance across the range of investment opportunities. Each chapter of the handbook addresses the possibilities for climate-related investment within a specific asset class. As a whole, the handbook is meant to: • Help investors devise a portfolio-wide climate strategy • Identify standards and procedures to integrate that strategy into investment management • Find ways to engage stakeholders to raise standards for all investors The Institute for Responsible Investment (IRI) hopes this handbook can facili-tate efforts by investors, fund managers, and consultants to assess the impacts of climate change on portfolios -- a careful analysis of climate risk and opportu-nity can add to financial performance over the long-run. Institute for Responsible Investment • 3 ... - tailieumienphi.vn