Young Professionals: Cheozung Ngyamtso (DoubleDividend Management)

Young Professionals: Cheozung Ngyamtso (DoubleDividend Management)

April 19, 2023

ESG-investing Climate Change Energy Transition ESG
Cheozung Ngyamtso (foto archief DoubleDividend)

Door Cheozung Ngyamtso, Analyst, DoubleDividend Management

What can (institutional) investors do to stop global warming?

‘In today’s ongoing climate blame game, it is imperative that investors and climate activists agree that economic growth and global warming are mutually reinforcing. To limit global temperature rise below 1.5 degrees Celsius, institutional investors can play crucial roles to finance transition to a low carbon economy, help companies leverage new technologies to solve climate and environmental challenges, and support business to renew ecosystem and biodiversity.

Economic growth needs to be pursued to sustain the growing population, yet the benefit of sustainable investment is still a dilemma for some. Investors have been so focussed on the short term profit that they often fail to see the long-term risk adjusted returns.

Thanks to the awareness and scientific evidence on risk related to climate change, there is now progress, or rather an interest, among investors and regulators regarding the ESG performance of the companies in which they invest. Investors are now incorporating science-based targets, net zero emission goals, carbon neutral ambitions et cetera in their investment decision process, albeit with carbon offsetting hiccups.

Investors need to strive for long-term benefit of sustainable investment. This includes investment in a sustainable production process (for example an increase of renewable energy consumption, a reduction of emissions and negative externalities on the ecosystem) and in products that enable transition to a sustainable society. Ultimately the whole product portfolio must be transformed to be more sustainable as some businesses would become obsolete.

The goal of Institutional investors should go beyond just beating a benchmark. This is because institutional investors have the responsibility as well as the potential to combat our most existential threat. With joint force, we can reverse the trend.’

 

Economic growth and global warming are mutually reinforcing.

 

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