Whether you believe in climate change or not, it’s economic impact is too important to ignore, according to a key account manager at Deutsche Asset Management.
Speaking at the Financial Services Partners annual conference in Brisbane last week, DWS Investments key account manager Natalie Windsor said climate change had gathered such a momentum in recent years that it is now impossible to ignore as an economic issue.
“Climate change is no longer just a social or scientific issue, but it is an economic issue, and it will have an effect on businesses and economies,” she said.
According to Windsor, Europe is currently leading the charge in environmental investments.
“When we launched a climate change fund in May last year we raised $6 billion through European investors, so clearly they are at the forefront of this … considering that globally between 85 and 90 per cent of people believe climate change is a serious issue, we expect interest in this to increase further,” Windsor said.
Windsor said as investors, whether you believed in the scientific merits of climate change or not, it is nevertheless in your best interests not to ignore its economic impact.
“Governments are taking action around the world, for example in 1987, 27 countries signed the Montreal Ozone
Protocol agreeing to reduce CFC emissions…and since the initial countries signed the Protocol a total of 183 countries have followed and the concentration of CFCs has fallen substantially,” Windsor said.
“This can be likened to a more recent agreement called the Kyoto Protocol 1997 which was an agreement to cut greenhouse gases by 5 per cent below 1990 levels.”
“What you have to realise as an investors … is whether you believe climate change is happening or not, governments are putting in regulations.”
“In terms of the potential size of the market, it is off the scale and so we believe that managers are going to require different investment skills in terms of making decisions about these portfolios.”
Windsor said, as part of DWS’ investment process, companies that fall within the area ‘mitigation’ (protecting the climate) and ‘adaptation’ (protecting against the consequences of climate change) are the most attractive areas for investment.
“For instance, cleaner technologies and energy efficiency are themes within the area of mitigation, examples of which are lower-emission power generation companies, companies producing hybrid motor vehicles, and natural resource companies.”
“So it’s obvious that there is plenty of opportunity for investment in climate change through environmentally-friendly products and services.”
