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July 15, 2009
Investor Awareness of Impact of Climate Change is Growing
    by Robert Kropp

The Institutional Investors Group on Climate Change finds that signatories to its Investor Statement on Climate Change report increased attention to climate change in their investments.

The Institutional Investors Group on Climate Change (IIGCC), a forum for understanding the investment implications of climate change whose 52 members represent $5.6 trillion in assets, has released its second annual report on the actions that the signatories to the IIGCC Investor Statement on Climate Change have taken.

The report, entitled Inv estor Statement of Climate Change Report 2008, found that awareness of climate change as a financial issue among signatories to the Statement is growing, and that more than three-quarters of them include references to climate change in their policies and belief statements. According to the report, "The main areas of focus for investors continue to be those where climate policy makes the issue material, for example where there are clear investment opportunities in renewable energy or sectors that are exposed to emissions trading schemes."

The report also found that 50% of asset owners are now questioning asset managers about their integration of climate change into investment research and decision-making, as well as shareowner activities. While the inclusion of climate change in Requests for Proposal (RFPs) and Investment Management Agreements (IMAs) are still rare, some asset owners will consider such an approach in the future.

Seventy percent of asset owners report that they monitor the performance of asset managers on climate change, and 60% report that their expectations are often met. But while the number of asset owners requesting advice on clean energy investments has grown, only a minority instructs their consultants to include climate change in their advice.

Regarding shareowner engagement with companies, the report found that policy commitments on climate change received less attention in 2008, as in the wake of the global economic crisis issues relating to corporate governance received greater attention.

According to the report, its "findings reinforce the view that strong public policy is critical for investors and companies to move capital towards a low carbon economy." Respondents report active engagement on such policy issues as greenhouse gas (GHG) emissions, emissions trading schemes, and renewable energy incentives.


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