GLOBAL - Some of the world’s largest investors have issued a document outlining their expectations of how companies should respond to climate change.

Co-ordinated by three leading investor groups on climate change - the US-based Investor Network on Climate Risk (INCR), the European Institutional Investors Group on Climate Change (IIGCC) and the Investors Group on Climate Change (IGCC) in Australia and New Zealand - the document outlines seven steps investors expect companies to take to minimise the risks and maximise the opportunities presented by climate change and climate policy.

Donald MacDonald, chairman at the IIGCC, said: “This document enables investors to communicate more clearly the actions they expect companies to be taking on climate change. By following these seven steps, companies can both reduce the impact of climate change and seize opportunities for growth.

“As the climate change talks in Durban demonstrated, there is global determination at a political level to move toward a low-carbon economy. It is, therefore, more important than ever for investors and companies to ensure they are well placed to identify and act upon climate change risks and opportunities.

“By providing a unified investor voice and a framework for engagement, this document will help investors and companies to achieve this.”

The seven steps are in the areas of governance, strategy, goals, implementation, measurement, disclosure and public policy.

By moving beyond disclosure and outlining clearly the areas in which investors expect to see companies take action, the guidelines aim to provide a platform from which investors can monitor the performance of companies and engage with them to encourage positive steps on climate change.

Investors are already taking action by monitoring alignment with their expectations through initiatives such as the Carbon Disclosure Project, and collaborating to engage with companies through investor networks and the UN Principles for Responsible Investment.
Jack Ehnes, chief executive at the California State Teachers’ Retirement System (CalSTRS) and a member of the INCR executive committee, said: “These guidelines are a clear message to companies that investors expect them to step up and better navigate this complex climate challenge.

“From the severe drought in Texas to massive flooding in Thailand, US investors are acutely aware of climate impacts on the global economy and corporate bottom lines.

“More than ever, shareholders are watching closely to see which companies are leading or lagging in managing climate change, which creates both enormous risks and opportunities for global businesses.”

The expectations are of particular importance for companies in carbon-intensive sectors, and those that have not have adopted carbon reduction targets or a systematic approach to managing climate change risks.

The statement will be formally launched at the Investor Summit on Climate Risk & Energy Solutions in New York on 12 January.

The statement can be found here.