Environmentally-focused investors often consider climate risks, but research suggests that carbon-intensive industries’ share prices may not reflect potential liabilities for damages from all associated hazards. Other climate-related challenges could include sea-level rise, storm surges, droughts, wildfires and extreme heat. Beyond performance, many investors recognise the problems of global warming and social issues, extending ethical considerations into broader aspects of their lives, including selecting portfolio assets.
Fossil fuel companies’ activities are the major contributors to Carbon Dioxide emissions leading to global warming. In response, many investors have chosen to ‘divest’ – to sell assets in these industries – arguing that the carbon in those fuels must stay locked below ground to avoid further warming. At P1 Investment Management, we have also taken the decision progressively to fossil divest.
Q G Rayer and P Walton (2019), COP 2018, Climate Change and P1’s Fossil Divestment Programme, DISCUS, available at http://discus.org.uk/cop-2018-climate-change-and-p1s-fossil-divestment-programme/, 3 pages, 10 January 2019.