Do investors need more ESG experts?

23 March 2017

Editor

EU regulation

Yes, says UK-based environmental think tank, E3G, which also believes global investors to rapidly increase their environmental, social and governance (ESG) capacity and to train all staff to be aware of ESG issues. According to E3G's research, a third of the investor signatories to the Principles for Responsible for Investment (PRI) do not employ any ESG specialists and that a further 20% employ only one such expert.

This means, E3G said, that over 500 of these world leading investment companies, managing $6.9 trillion in assets, employ one or fewer experts in responsible investment.

E3G said that the globally agreed goal of keeping the increase in the global temperature to well below 2°C, was enshrined in the Paris Agreement on climate change, can only be met if investors fully appraise and respond to the risks and opportunities posed by climate change.

The report said that by "By failing to employ ESG, specialists these investors are not only putting their client’s assets at risk, they are putting global economic stability at risk by increasing the chances of an economic shock as dangerous levels of climate change unfold."

E3G believes that the globally-agreed goal of keeping the increase in the global temperature to well below 2°C, as enshrined in the Paris Agreement on climate change, can only be met if investors fully appraise and respond to the risks and opportunities posed by climate change.

"By failing to employ ESG specialists these investors are not only putting their client’s assets at risk, they are putting global economic stability at risk by increasing the chances of an economic shock as dangerous levels of climate change unfold." E3G said.

Ingrid Holmes, director of E3G said: “If these companies do not have the capacity to assess climate change risk they are not only putting their own companies at risk, they are locking in investment in a high carbon future that has the potential to cause a global economic crash.  These investors are at the heart of the solution to avoiding dangerous climate change. Climate change is a global emergency and the investment community must now act accordingly.”

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