Lombard Odier supports the IIGCC global investor statement to governments on climate change

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Lombard Odier supports the IIGCC global investor statement to governments on climate change

Climate change presents a clear and present systemic risk to investment portfolios and is being widely underestimated and mispriced in the market today.  Climate change will affect all agents in the economy (businesses, governments and households), across all sectors, asset classes and jurisdictions. The risks will likely be correlated with, and potentially aggravated by, tipping points, in a non-linear fashion. This means the impact of these risks could be much larger, and more widespread and diverse than those of other structural challenges and developments.

Climate change will affect all agents in the economy, across all sectors, asset classes and jurisdictions.

We have to tackle this risk head on across the entire investment value chain from the overarching macroeconomic analysis, to security selection, through to our stewardship of client assets. As asset managers, we believe it is vital that we use our influence to help reduce these systemic risks, but also to help accelerate the transition towards a more sustainable economy. The path to a net-zero greenhouse gas emissions economy is already creating unprecedented opportunities for companies with the right vision and foresight, which investors will be able to benefit from. Market forces and governments are creating feedback loops that drive this economic transition forwards.

There is still a significant policy ambition gap, however, which will need to close in order to achieve the goals set out in the Paris Agreement of “holding the increase in the global average temperature to well below 2°C above preindustrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”.

The path to a net-zero greenhouse gas emissions economy is already creating unprecedented opportunities for companies with the right vision and foresight.

As long-term investors, Lombard Odier fully supports the Global Investor Statement to Governments on Climate Change, which calls on global leaders to strengthen their efforts to ensure they meet the Paris Agreement goals, accelerate private sector investment into the low-carbon transition and commit to improve climate-related financial reporting.

Lombard Odier also supports the final recommendations of the Financial Stability Board’s (FSB) Task Force on Climate-related Financial Disclosure (TCFD). As asset managers with fiduciary responsibility, it is vital that we have as full an understanding as possible of companies’ ability and willingness to transition to a more sustainable economy. The TCFD recommendations will improve our ability to analyse material risks companies face and how well they are positioned for the transition to a decarbonised economy. The TCFD recommendations will be a key focus point for our own stewardship, but we believe it is critical that governments also commit to improving climate-related financial reporting by publically supporting the TCFD recommendations.

Lombard Odier fully supports the Global Investor Statement to Governments on Climate Change.

Learn more on the Institutional Investors Group on Climate Change here https://www.iigcc.org/

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