Hermes: Companies ignoring climate change are risky investments

Hermes CEO Saker Nussibeh warns companies which fail to act on climate issues will make for bad investments

Investment giant warns climate action is key to long-term profitability in its 2018 Carbon Report

Firms which are not prepared for the potential impacts of climate change could find themselves lumbered with stranded assets, one of the world’s leading investment managers has warned.

In its 2018 Carbon Report, released yesterday, Hermes CEO Saker Nussibeh said the financial case for climate action is becoming “ever clearer”, with progressive companies set to thrive during a green transition while laggard firms are set to struggle.

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“Companies that aren’t thinking about how to adapt to the low-carbon economy are at risk of being left with stranded assets, while those that are offering solutions are really well-placed to thrive,” Nussibeh writes.

The report underscores the growing investor pressure companies are facing to develop and disclose their environmental strategies, and points to a looming future threat that cash could be withdrawn if they fail to deliver. 

The research spotlights the investor opportunity in financing companies which start from a low ESG base but are improving. “There is plenty of evidence that companies that perform better on ESG issues provide better financial returns,” it notes. 

However, to drive “real change” investors should engage with companies and offer precise directions about what they must do to improve their environmental performance, the report advises.

And ultimately investors must ensure they are not exposed to companies which would be vulnerable in a low-carbon economy, Nussibeh said.

“Investors must ensure that they, and the companies

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