Climate change risks can have a long-term impact on investment returns. ACSI and its members therefore have a strong interest in portfolio companies managing climate change risk and opportunities. That is why ACSI engages with companies to encourage effective mitigation of those risks.
Unmitigated climate change would have catastrophic impacts across the globe, including impacts on human health, biodiversity, water availability, and disruption of ecosystems.
Climate change is therefore distinctly financial in nature, presenting risks and opportunities for business. There are physical risks associated with rising mean global temperatures, rising sea levels and increased severity of extreme weather events, and transitional risks and opportunities as the economy adjusts to a lower carbon future.
Long-term investors want to see an orderly transition to a low-carbon economy to reduce negative impacts on the economy, affected communities and ecosystems. A planned transition will result in better economic outcomes and will take account of the needs of various stakeholders with better management of uncertainty and volatility.
ACSI’s stewardship focus on climate change is on encouraging companies to ensure their strategies and actions are aligned to the goals of the Paris Agreement – to limit climate change to well below 2°C and, ideally, to 1.5°C. This includes company engagement to drive the adoption of reporting of climate risk, net zero commitments and accompanying pathways to achieve those aims. It also includes advocacy aimed at aligning public policy settings to the goals of the Paris Agreement.