Climate risks pricing not believed by investors

The Global Sustainable Investment Alliance (GSIA) has released its Sustainable Investor Poll on TCFD Implementation, with an overwhelming majority of respondents (87 per cent) saying they do not believe that markets are consistently and correctly pricing climate risks into company and sector valuations.

In the survey of 272 investment professionals who practice sustainable investing, including respondents based in Australasia, Canada, Europe, Japan, UK and the US, a majority (59 per cent) said they are unsatisfied with publicly traded companies’ climate disclosures. Investors in the US where particularly dissatisfied, and globally not a single respondent reported being “very satisfied” with corporate disclosures on climate change.

However, 92 per cent of respondents agreed that the TCFD recommendations are helpful and the same percentage agreed that they will ‘help’ investors to limit the global average temperature rise to less than 2C. In total, 34 per cent of survey respondents have already incorporated TCFD disclosures into their investment analysis, led by respondents in the UK and Australasia. A further 26 per cent of respondents plan to incorporate the TCFD recommendations into their analysis in the near-term.

Whilst this may appear to show progress, it is slow, with only 16 per cent currently reporting in line with the TCFD recommendations, 19 per cent of respondents saying they plan to do TCFD reporting in 2020 and 28 per cent exploring this option.

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