Trading & Financial News
No Result
View All Result
Friday, April 18, 2025
  • Login
  • Economy
  • Markets
  • Forex News
  • Investing
  • Stock Trading
  • Crypto
Subscribe
Trading & Financial News
  • Economy
  • Markets
  • Forex News
  • Investing
  • Stock Trading
  • Crypto
No Result
View All Result
Trading & Financial News
No Result
View All Result
Home Investing

Climate Change, Risk Management, and the Freedom to Invest Responsibly

by Tradinghow
August 25, 2023
in Investing
A A
0
Climate Change, Risk Management, and the Freedom to Invest Responsibly
152
SHARES
1.9k
VIEWS
Share on FacebookShare on Twitter


https://primexbt.investments/start_trading/?cxd=459_549985&pid=459&promo=[afp7]&type=IB https://primexbt.investments/start_trading/?cxd=459_549985&pid=459&promo=[afp7]&type=IB https://primexbt.investments/start_trading/?cxd=459_549985&pid=459&promo=[afp7]&type=IB

Risk management is so simple a concept and so central to financial analysis that it feels superfluous to even mention it. Yet when it comes to climate change and sustainability, efforts are under way across the United States to impede our ability as investors to conduct simple risk management. Policymakers have proposed and even passed laws that make it more difficult, if not illegal, for investors to consider the financial risks of climate change.

These efforts are misguided. The freedom to invest responsibly and the principle of risk management must be defended, and that requires us to go back to basics.

Does climate change pose financial risk? The answer is clear. Drought, heat waves, and extreme weather all exact a signficant toll from infrastructure, supply chains, facilities, and people. Indeed, the United States recorded $165 billion in losses from climate disasters just last year. But the climate crisis also presents enormous opportunity. The Inflation Reduction Act has driven a clean energy boom across the country. Investors should not have to sit it out.

Informed by these facts, investors have increasingly integrated climate considerations into their decision making precisely because the financial effects are so clear. They are acting on sound, rational logic, and governments should not interfere with that process.

Yet some states have instituted new laws forbidding investors from taking climate change impacts into account when assessing bond issuances, pension fund management, and other government contracts. In effect, they are penalizing risk management.

Ignoring a financial risk does not make it go away; it only makes it worse. Whether on individual balance sheets or across a national economy, failing to account for and address potential threats has a significant downside. Investors need data to assess these risks and the freedom to act on that data based on their business considerations. Their fiduciary duty requires it.

When investors lack these essentials, markets are less efficient and less effective, and everyone invested in those markets suffers. If there are fewer financial institutions competing in the marketplace, states will be forced to pay millions more in extra interest payments. And if states work only with institutions that do not consider climate- and sustainability-related risks, they will expose their pension funds, beneficiaries, and taxpayers to the downsides of those risks.

Most investors understand the threat and are responding as they should: by studying the data, following the trends, and keeping a watchful eye out for risks and opportunities. But being rational market actors isn’t enough.

ESG Certificate ad from CFA Instiute

That’s why investors and private and public sector leaders have joined together to urge policymakers to protect every investor’s right to incorporate climate and sustainability risks into their decision making. They are making a clear statement that executing their fiduciary duty should not be subject to government interference. Such interference will only make it harder for them to do their jobs and serve their clients.

That is why we all need to stand up, speak out, and demand the freedom to invest responsibly.

If you liked this post, don’t forget to subscribe to Enterprising Investor.


All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images / trekandshoot


Professional Learning for CFA Institute Members

CFA Institute members are empowered to self-determine and self-report professional learning (PL) credits earned, including content on Enterprising Investor. Members can record credits easily using their online PL tracker.



Source link

  • Trending
  • Comments
  • Latest
The Evolving International Cannabis Landscape

The Evolving International Cannabis Landscape

March 20, 2024
UK Faces Two Decades of No Earnings Growth and More Austerity

UK Faces Two Decades of No Earnings Growth and More Austerity

July 29, 2023
Emirates Steel drops interest in Thyssenkrupp steel unit

Emirates Steel drops interest in Thyssenkrupp steel unit

July 27, 2023
Uniswap Launches Permissionless Bridging Across 9 Networks

Uniswap Launches Permissionless Bridging Across 9 Networks

October 24, 2024
High Street Retailers Pin Hopes On Discount Splurge In Black Friday Fever

High Street Retailers Pin Hopes On Discount Splurge In Black Friday Fever

0
UK Faces Two Decades of No Earnings Growth and More Austerity

UK Faces Two Decades of No Earnings Growth and More Austerity

0
Learn how to trade. For beginners

Learn how to trade. For beginners

0
Trading for beginners

Trading for beginners

0
Kim Soo Hyun breaks silence on financial trouble amid lawsuit discrepancy: ‘We did not fail to pay…’ | Web-series News

Kim Soo Hyun breaks silence on financial trouble amid lawsuit discrepancy: ‘We did not fail to pay…’ | Web-series News

April 18, 2025
Mortgage Rate Fatigue? Here’s How to Get Off the Seesaw of Wondering When to Buy

Mortgage Rate Fatigue? Here’s How to Get Off the Seesaw of Wondering When to Buy

April 18, 2025
TransPacific Cargo Trade Decimated by Trump’s Tariff War

TransPacific Cargo Trade Decimated by Trump’s Tariff War

April 18, 2025
GITEX Nigeria 2025: Government Support Fuels New Tech Era

GITEX Nigeria 2025: Government Support Fuels New Tech Era

April 17, 2025

Recent News

Kim Soo Hyun breaks silence on financial trouble amid lawsuit discrepancy: ‘We did not fail to pay…’ | Web-series News

Kim Soo Hyun breaks silence on financial trouble amid lawsuit discrepancy: ‘We did not fail to pay…’ | Web-series News

April 18, 2025
Mortgage Rate Fatigue? Here’s How to Get Off the Seesaw of Wondering When to Buy

Mortgage Rate Fatigue? Here’s How to Get Off the Seesaw of Wondering When to Buy

April 18, 2025

Categories

  • Business
  • Crypto
  • Economy
  • Forex News
  • Investing
  • Markets
  • More
  • Stock Trading
  • Trading for beginners

Site Navigation

  • Home
  • Contact Us
  • Stock Trading
  • Markets
  • Investing
  • Other Links
  • Privacy & Policy
Trading & Financial News

We bring you the fastest breaking news on Trading, forex, and finance submitted from credible and reliable news sources around the world.

© 2023 Tradinghow Useful forex analysis and financial news, submitted by credible news sources around the world.tradinghow.

No Result
View All Result
  • Contact Us
  • Home
  • Economy
  • Crypto
  • Investing
  • Markets
  • Forex News
  • Stock Trading

© 2023 Tradinghow Useful forex analysis and financial news, submitted by credible news sources around the world.tradinghow.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In