In the US, the California State Teachers Retirement System (CalSTRS), the country’s second-largest pension fund, has taken concrete steps in this direction. The fund, which runs $156bn (€117bn) worth of assets, has become the first major public fund to back the Enhanced Analytics Initiative (EAI) – an international collaboration of asset owners and managers – in its battle to encourage investment research to consider the impact of non-financial factors such as climate change on long-term company performance. Climate change has certainly affected the US economy heavily; eight of the 10 most expensive disasters in its history occurred within the past four years, according to the US Insurance Information Institute.
In Europe, the recent agreement forged by Dutch asset manager Robeco with Swiss-based SAM Group (Sustainable Asset Management) represents a clear signal of the high expectations that the industry places on sustainability investing. The two companies have teamed up to create a “sustainability platform”, relying on the synergies that will develop from combining their operations to drive the business growth.
“SAM will become the centre of expertise for all our sustainability and clean technology efforts and institutional mandates”, said George Möller, chief investment officer at Robeco.
Mr Möller is confident that sustainable investing is a critical area of growth. “We feel very strongly on the issue of sustainability and clean technology, such as new energy forms,” he said. “There are issues of scarcity of resources which have to be solved and that can only be done through technology.”
Robeco’s private equity “clean tech” operation in the Netherlands will also interact closely with SAM group, said Mr Möller. Robeco is planning to set up a new dedicated “clean tech” fund of private equity funds, in order to allow investors to spread the risk of investing in the sector.
Former World Bank chief economist Nicholas Stern estimated in his recent report on The Economics of Climate Change that unless action is taken immediately, the overall costs and risks of climate change will be equivalent to losing at least 5 per cent of global GDP each year.
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