Investors Increasingly Seek a Sustainable FutureBy Sofía Hanna | Mon, 08/23/2021 - 16:01
All stakeholders must take responsible actions to reduce greenhouse gas emissions and decrease the risks and impacts of climate change. Investors are increasingly considering the environmental impact of companies, knowing that while some effects may be long-lasting or irreversible, there are still actions that could be taken to delay permanent damage.
“Over 1,000 institutional investors have committed to cutting fossil fuel stocks from their portfolios. The current valuations of fossil fuel companies assume that proven and probable reserves (included as assets on the balance sheet) will be realized as a way to forecast production,” said S&P Dow Jones Indices.
A company’s environmental policy becomes relevant given how global policies are changing, making actions against climate change increasingly attractive to investors. Companies are thus changing their priorities and looking for opportunities that lead to a lower-carbon economy.
Investments made seeking a lower carbon footprint are increasing because engaging with companies to encourage them to change their business practices is a better financial strategy than long-term portfolios that represent global capital markets and divestment, explains S&P. Also, investors and companies are now taking into account the risk from future carbon prices, which continues to increase given regulations of carbon emissions through taxes, emissions trading schemes and fossil fuel extraction fees.
Now more than ever, especially with the polluting results of the pandemic, long-term solutions are being sought to find a strategy that supports long-term, sustainable recovery. “We must not ignore that having a sustainable brand is essential for environmental balance. Today in our country, we have more than 92 million users who are connected, making purchases, on social networks, connected to social networks and streaming services, and carrying out different online activities. Together we can reinforce the importance of taking responsibility for their electronic consumption and demanding all brands adopt a more environmentally friendly posture,” Enrique Marú, Chief Revenue Officer at Sr. Pago, told MBN.
Expected transitions aligned to environmental objectives include implementing divesting, decarbonizing or de-risking strategies, which need assessing companies from multiple perspectives. Investors should also be aware of their exposure to new risks like stranded assets or physical ones such as droughts and hurricanes. Now, it is essential for companies to align themselves with new industry standards and move along with what investors and consumers are looking for.