From Fad to Fixture: How Investors Are Waking Up to Climate Risk

Historically, investors haven't worried about how climate change or greenhouse gas-cutting laws might affect their ledgers.  But as a growing number of money managers, Wall Street traders, and regulators agonize over climate change costs, that stance has shifted from apathetic to alert.

"Environmental and social scandals are showing up in stock price crashes," said Verity Chegar, an analyst at BlackRock Inc., which manages $4.6 trillion.

Climate risks, the new financial hazards

Pollution and man-made disasters, like oil spills or toxic leaks, are often low-level corporate issues. For decades, banks and financiers have asked about environmental hazards but framed them in a financial context, Chegar explained.

Still, she said, environmental damage "becomes material to the company after the oil spill."

After the Deepwater Horizon rig exploded April 20, 2010, triggering the worst oil spill in U.S. history, BP PLC swiftly lost half its market value: In two months, the share price plunged from more than £600 to just above £300.

In October BlackRock said "sustainable investing is not a passing fad."  It deemed climate change an inevitable "regulatory risk" and is undergoing a global effort to incorporate environmental risk assessments into its investment strategy.

Read more at From Fad to Fixture:  How Investors Are Waking Up to Climate Risk