In 2015, California’s legislature passed a bill that will require the two largest pension funds in the United States—CalPERS and CalSTRS, which together manage $476 billion in assets—to divest from coal. This is just the start of a flood of change in terms of how investors across the world are being more conscious with their capital.
The global shift of investors looking beyond risk-return to include environmental considerations in investment decisions is not just a case of ethics to support poor communities that suffer from natural disasters or sympathy towards the polar bears on the melting ice-caps - all the negative impacts of climate change. There is also a strong business case for investing in the planet's future (the estimated cost of not investing in climate resilience is $44 trillion) and an even stronger case for self-preservation. Essentially, these investors are 'skating to where the puck will be', putting money into initiatives that will be smarter decisions in the long term.
Whatever the motivation, I'm thrilled we are moving into an era of conscious capitalism! For more updates on this topic, follow me on Twitter @NatashaGarcha
Hockey great Wayne Gretzky once said, “I skate to where the puck is going to be, not where it has been.” The same holds true for investing. Those who invest today in the assets that set the world up for a low-carbon, climate resilient future will be the winners of tomorrow.