Environmental impacts on investments quantified
Investors in the world’s major corporates have been given something to think about with new research finding that the world’s top 3,000 companies were responsible for $2.15 trillion worth of environmental damage in 2008.
The data is the result of a study conducted under the auspices of the United Nations Principles for Responsible Investment which was designed to quantify in monetary terms the environmental harm caused by business and the possible future consequences for investor portfolios and company earnings.
The study warns investors that as environmental damage and resources depletion increases and governments start applying a more vigorous “polluter pays” principle, the value of large portfolios would be affected through higher insurance premiums on companies, taxes, inflate input prices and the price tags for clean-ups.
The study found that, in total, global environmental damage caused by human activity in 2008 represented a monetary value of $6.6 trillion, which was the equivalent of 11 per cent of global gross domestic product.
It said the most environmentally damaging business sectors were utilities, oil and gas producers, industrial metals and mining and warned that workers and retirees would see lower pension payments from funds invested in companies exposed to environmental costs.
AUTHOR
Mike Taylor
Recommended for you
Retail investment into private credit funds could surpass that of sophisticated investors, according to ASIC, but the regulator admits it is unsure how and where these individuals are first being introduced to the vehicles.
With the high cost of advice keeping young Australians locked out of advice, a fintech provider has said digital advice is key for licensees to capture this unadvised demographic.
ASIC chair Joe Longo has announced he will step down at the end of his term, departing the corporate regulator in May 2026.
When it comes to the phase-out of AT1 bonds, Schroders fixed income manager Helen Mason has urged financial advisers to sell up sooner rather than later or risk capital losses.
