Investors are paying close attention to the changing climate, as it poses new financial risks to a variety of industries.

Rob Main is with the Investment Stewardship team at Vanguard, one of the world’s largest investment management firms.

Main: “For many companies across sectors like the material sector, the energy sector, the industrial sector, the topic of climate risk is going to be very relevant.”

For example, extreme weather can threaten food and textile companies that depend on agriculture. And limits on carbon pollution could cut into the profits at fossil fuel companies.

So Vanguard now urges companies to disclose their climate risks. Main says his firm is especially focused on situations where ignoring those long-term risks could make a company appear more valuable than it really is.

Main: “Given our duty to steward our shareholders long-term investments, we must be aware of this risk, where it’s most relevant, and ensure companies are addressing it in an appropriate manner.”

Main says it’s all part of being a well-managed, profitable company.

Main: “We have a starting point of believing that well-governed companies will be better performers long term.”

Reporting credit: Mark Knapp/ChavoBart Digital Media.
Image graphic: Created by David McCarthy.