Managing climate risk in investment portfolios
This article is the second in a two-part IFM series on climate-related investment risks. It explains how we are managing climate related risks in our investment portfolios, including case studies of what we have achieved already with our investee companies and an outline of what we hope to do in the future.
We recognise that climate change presents both transition and physical risks to our investments. Therefore, it’s important to understand these dimensions of risk across our investment portfolios, and to develop plans to adapt and/or mitigate the worst impacts, and protect and increase the resilience of our assets over the long term.
Many of the assets in our infrastructure portfolio have already initiated climate change adaptation and/or mitigation projects. For example, Australian airport assets have developed strategies to reduce bushfire risks, including the implementation of a two-stage seasonal and area-specific burning strategy. They have also augmented infrastructure and made commitments to measures to mitigate flood risk.
As supporters of the Paris Agreement, we explicitly factor climate change risk into all of our investment decisions. We engage and work with investee companies to support their transition to a low-carbon economy in ways that create positive environmental and social outcomes, and through those, better commercial and investment outcomes.
We also engage directly and collaboratively with listed companies, and exercise our proxy voting rights with the aim of influencing and guiding corporate behaviour, including the recognition and management of climate change.
Meet the author
Chris Newton
Chris manages a team of responsible investment specialists that work closely with our investment teams to enhance responsible investment strategies and support the ESG needs of our investors.
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