Green investments are no longer just a luxury, but are now a legal responsibility, according to a new report by theUnited Nations Environment Programme (UNEP) and a powerful group of asset managers who control some $2 trillion in assets.
The 120-page publication argues that if investment consultants and others do not incorporate environmental, social and governance (ESG) considerations into their services, they face ‘a very real risk that they will be sued for negligence’.
It also stressed the central role that the world’s largest institutional investors – including pensions funds, insurance companies, sovereign wealth funds and mutual funds – have in easing the transition to a low-carbon and resource-efficient green economy.
UNEP Executive Director Achim Steiner said: ‘ESG issues are not peripheral but should be part of mainstream investment decisions-making processes across the industry.’
He also noted that creative market mechanisms and other incentives can help to ensure that as investors return to markets after the current financial turmoil ends, they will put their funds into a greener economy and not the ‘brown economy of yesterday’.
The new report, titled ‘Fiduciary responsibility: legal and practical aspects of integrating environmental, social and governance issues into institutional investment’, was produced by the Asset Management Working Group of the UNEP Finance Initiative (UNEP FI), a partnership between the agency and nearly 200 financial institutions around the world.
Lis Stedman
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