The Paris Climate Conference will be highly significant to institutional investors, not necessarily because of submitted targets, but because of a new regulatory framework to address the issue, according to LGS Super.
There’s a target of limiting the global temperature increase to 2 degrees Celsius above pre-industrial temperatures, but the current trajectory means the increase will be close to 4 degrees by 2050. As institutional investors are the financers of that trajectory it means a regulatory overlay and framework is going to come in, predicts Bill Hartnett, head of sustainability at LGS Super.
“That won’t come as a huge bang in December in the Paris meeting, but I’m very confident there’s going to be an ongoing push, where there will be more meetings, more ratcheting up of targets,” Hartnett said.
“There’ll be more commitment in this area and this inexorably means some industries that have had a strong long-term forecast may not be so strong. There could be tremendous disruption that comes through this.
“The implications for investors are particularly strong.”
Hartnett was in Paris earlier this year, in part gauging the extent to which investors were willing to address climate change.
He added the UN saw technology and institutional investors as the two major sectors for addressing climate change not only on the opportunity side, but on the downside as well.
“[We need to look at] what we are currently investing in and whether those sort of industries and practices are going to be as prevalent going forward,” he said.