News Digest: Investor indifference impacting climate goals
September 1, 2022
If climate change is among the greatest challenges facing humanity today, the growing investor indifference to the issue is posing a real threat to achieving sustainable growth. New research suggests that as climate goals get more elusive, the hidden costs of going green and investor indifference is making net zero commitments tougher.
The research conducted by Arshia Farzamfar and team suggests that companies pressured to improve climate change performances do so at the expense of other compliance goals. So, a company chasing green goals seems to be doing so at the expense of their targets around healthcare, employment, workplace safety and consumer protection.
Institutional investors can shift to sustainable and impact investing by considering the tradeoff between environmental and social issues when mandating green action. Asset owners make asset managers more accountable to ensure the desired levels of impact and then jointly espouse the risk-return tradeoffs associated with green commitments to the beneficiaries.