Reflecting on Earth Day, climate change and ethical investing

News & Insights

Julie Hutchison

22nd April 2016 at 10:00am

Today, 22 April 2016, marks the day when the Paris Climate Agreement is open for signing at the United Nations in New York.

This landmark agreement has been adopted by 195 countries and now the legal process begins to formalise it.  It sets the scene for action to limit emissions so that global warming stays within 2 degrees of pre-industrial levels.

It’s also Earth Day, which brings with it a focus on environmental issues.

What might the Paris Climate Agreement mean for investors, individuals or charities?

Some personal investors look at how to reflect their values in their investments whether that’s based on an idea of ‘ethical’ investing or ‘green’ investing. You’ll find more information about that here.

The fossil-fuel debate

Recently, some charities have looked at whether holding fossil fuel-related investments is compatible with their charitable purposes, or whether it represents a risk. Some universities and church bodies have divested from part of their holdings – they’ve sold them.

The counter argument is to remain a shareholder to retain voting rights and stay engaged with the company to try to influence policies, for example by voting at their AGM. I’ve reported on both sides of this debate here.

Whichever side of the debate you prefer, there’s no doubting that the Paris Climate Agreement sets new norms which will create both risks and opportunities for investors.

Energy efficiency, transport and climate change resilience measures might all see renewed attention from investors as sectors of interest. Charities with purposes relating to the environment, wildlife or poverty in particular may want to review their investments, based on a risk management assessment of climate change risk.

Join the conversation and follow us on twitter @StandardLifeUK and Facebook.

The information in this blog or any response to comments should not be taken as financial advice. Laws and tax rules may change in the future.

Standard Life is not responsible for the content of external websites. The information here is based on our understanding in April 2016.