First State expands climate change disclosure

Added 12th May 2016

First State Investments has begun disclosing its exposure to climate risk across a number of asset classes.

First State expands climate change disclosure

In its latest responsible investment and stewardship report, the firm said it fundamentally accepts the science of climate change and that a transition to a low carbon global economy is underway.

Acknowledging that it will impact different assets in different ways, First State added: “As allocators of capital, stewards and shareholders, the individual and collective decisions investors make will influence the nature of the transition.

“The wicked challenge of climate change is that no individual or group are solely responsible, and so without good faith efforts by governments, companies, investors and individuals the best solutions will come too slowly to mitigate the worst impacts.”

However, the firm said, while it was encouraged by the growing trend toward increased climate change disclosure, it was concerned about the nature of some of it, particularly the “almost exclusive focus by some on ‘carbon footprinting’.

Without contextual information on how carbon emission intensity influences investment decision making, or around limitations with the footprints themselves such disclosure can be misleading, the firm said.

As a result of this First State said it has instead elected to ensure its active equity teams “provide an additional statement on their approach to climate change and their exposure to fossil fuel companies”.

“When considered alongside the substantial disclosure we already provide on the ESG integration and engagement approaches of each team we believe this will provide the foundational context which clients and other stakeholders require,” the firm said.

Will Oulton, global head of responsible investment at First State Investments said: “We believe that climate change will impact the long-term performance of our clients’ assets in different ways. As allocators of capital, shareholders and stewards, the analysis, engagement and subsequent decisions we make will have an influence on our clients’ long-term interests.”

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Geoff Candy

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Geoff Candy joined Portfolio Adviser as News Editor in May 2014. He has been a financial journalist and broadcaster since 2005 and, in that time has worked in both South Africa and the Netherlands, covering everything from high street retailers and construction companies to mining and insurance.



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