As Hurricane Florence made landfall and followed a path projected to move across the Carolinas on Friday, advocates of sustainable investing sought to draw renewed attention to climate change and the benefits of aligning capital to combat a warming planet.
Climate change has long been a major theme for advocates of so-called ESG investing, which incorporates environmental, social and corporate governance factors into investment decisions. At least six of the United Nations’ Sustainable Development Goals relate to climate change. The role investors can play in stemming climate change was addressed at conferences in the days leading up to Hurricane Florence’s landfall, including at the Principles for Responsible Investment meeting and the Global Climate Action Summit, both in San Francisco. In New York, it was the Sustainable Investing Conference at the U.N., where the organizer, the ESG specialist Gitterman Wealth Management, said 570 people attended with another 170 on the waiting list—compared to just 240 last year.
And in Washington, Senator Elizabeth Warren (D-Mass.) has introduced the Climate Risk Disclosure Act of 2018, which directs the SEC to issue a rule requiring public companies to report information relating to their climate risk exposure. “Climate risk reporting by public corporations has been hobbled by inconsistent and non-comparable data,” Lisa Woll, CEO of the industry group US SIF: The Forum for Sustainable and Responsible Investment, said in a statement. Warren’s proposal, she said, “will improve reporting on climate risk which will benefit investors and clarify reporting requirements for corporations.”
But while ESG investing has been growing in popularity, financial advisors, who direct a significant portion of capital, have been reluctant to adopt it. Less than 10% of financial advisors are “highly interested” in ESG investing, while more than 60% have “little or no interest,” according to the Morgan Stanley Institute for Sustainable Investing. In contrast, 75% of individual investors are interested in ESG.