What Worries the World's Most Powerful Money Managers

A version of this post appeared on Business Insider.

Climate risk has arrived as a business issue to be reckoned with. Over the last year, the investment community sent a clear message that they are focused on environmental sustainability and expect companies in which they invest to do the same.

Some of the world's largest money managers have made public commitments to the environment, called on companies to improve disclosures related to climate risk, increased allocations to companies with strong sustainability track records, and overruled board resolutions on climate issues. It's now clear that public companies that ignore environmental sustainability will increasingly face investor questions, scrutiny, and possibly direct activism.

Here are ten notable examples of big money managers highlighting the environment as a top investment concern:

New York City announces plan to divest fossil fuel companies from its $189 billion in pension funds (January 10, 2018)

In January 2018, New York City announced a goal to divest its $5 billion holdings in fossil fuel companies from its $189 billion in pension funds within five years. City officials said the divestment would be "among the most significant divestment efforts in the world to date."

New York City Mayor Bill De Blasio said, "New York City is standing up for future generations by becoming the first major US city to divest our pension funds from fossil fuels." The City also announced plans to sue the world's most powerful oil companies over their contribution to global warming. "We're bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits."

Majority of ExxonMobil shareholders vote for greater disclosure of company's climate change risks (December 12, 2017)

In 2017, over 50 of ExxonMobil's institutional shareholders demanded the company produce an annual report on the risks to its business from extreme climate change and government policies seeking to reduce carbon emissions. The resolution, which the company's Board of Directors opposed, was ultimately approved by 62 percent of shares voted in Exxon's May annual meeting.

The majority shareholder endorsement marked a seminal moment demonstrating that investors will vote against a company's own recommendations related to climate change issues. The shareholder vote also highlighted the increasing value investors put on disclosures of climate risks to the businesses in which they invest their money.

225 investment funds with combined $26 trillion in AUM pledge to pressure companies to curb their greenhouse gas emissions and disclose climate-related financial information (December 12, 2017)

In connection with the December 2017 One Planet Summit in Paris, 225 investment funds with $26 trillion in assets under management pledged to turn up the pressure on companies around environmental and sustainability issues, demanding that companies disclose financial information related to climate change and reduce greenhouse gas emissions. The pledge was notable in its show of partnership across a broad field of investors, political figures such as French President Emmanuel Macron, and transnational organizations such as the United Nations and World Bank.

World's largest equity investor announces proposal to exit oil stocks (November 17, 2017)

Quickly dubbed a "shot heard around the world," Norges Bank Investment Management ("NBIM"), Norway's $1 trillion sovereign wealth fund, announced in November 2017 a proposal to sell $35 billion in oil and natural gas stocks — and completely abandon the sector. As the world's largest equity investor, NBIM sent a shockwave across markets with its announcement.

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Lex Suvanto is global managing director, Financial Communications & Capital Markets.

Tim Quinn is a senior account supervisor, Financial Communications & Capital Markets.

Patrick Hendry

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