Prioritise climate risk on investment portfolios
Govt urged to address regulatory challenges
The impact of climate risk on investment portfolios should be a priority, especially as more businesses adopt Environmental, Social, and Governance ( ESG) banking.
More institutions are now exploring climate risks to protect their investments and make good business decisions. Banks such as ABSA and FNB ESG have risk and impact measuring platforms to provide data and insights necessary to make informed and sustainable investment decisions.
Climate finance activist, and Business Management and Environmental Science student, Lesedi Outlwile said that consideration of climate risks informs the new wave of ESG integration processes in banking and business.
“Due to the growing impacts of climate change, climate risk is a priority due to the interconnected nature of the planet, particularly as the impacts of climate change worsen and the events increase the risk.”
Climate risks are of threat due to supply and chain bottlenecks, product shortages, rising inflation, and energy crisis. Of course, climate risk is not the only threat or problem for the global economy, inequality, human rights abuses, and political inequality are also disruptions to the global economy.
FNB and Rand Merchant Bank had an ESG seminar last month where Assistant Minister of Environment, Natural Resource Management, and Tourism Mabuse Pule called on the private sector to be more involved in the sustainable development sector to bolster green industries.
“The private sector including banks has the potential to pave way for ESG- related opportunities in the local market. There is a need for increased private sector involvement in sustainable development, and also create consultation between policymakers and society at large so that the adoption of the ESG strategy is aligned with the national strategy office, and is also treated with high priority so that new markets can be created from it that would benefit the nation, especially youth - in addressing unemployment and decrease poverty.”
Climate risk has become a contentious topic after Stuart Kirk the former HSBC executive at the bank was reportedly suspended after he said in a presentation that “climate change should not concern investors as a financial risk.”
He eventually resigned due to the hostility his sentiments attracted.