Climate Change and the Independent Research Industry

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New York–In recent years, evidence has mounted that human activities are causing hazardous changes to the global climate system.  Though there is still much debate about how the world community should deal with this issue, there is little disagreement among scientists that global climate change poses a series of weather-related risks to peoples and ecosystems throughout the world.

With public concern rising, many major players in the investing community are beginning to recognize that climate change is more than an environmental issue-that it poses discrete financial risks (and opportunities) as well.  Throughout the world, many investors have been closely watching political trends to surmise if any new climate-oriented regulations are on the horizon.  Many investors have also been examining their portfolios to determine if they have exposure to companies that will be directly affected by climate change.

In order to profit off of growing concern about climate change, a number of research firms have developed systems to examine the level of risk that climate change poses to individual companies.  Asset4, a provider of “extra-financial” information that was founded in 2003, considers the level of greenhouse gas emissions, the level of renewable energy use, and other related factors in analyzing the intangible value of over 1,000 publicly traded corporations.  Users of the Asset4 system can customize their research platform so that companies with the best climate-related factors are highlighted. Innovest Strategic Value Advisors is another company that looks at climate change-related issues in publicly traded companies, offering quantitative ratings as well as in-depth reports that provide a more qualitative spin on issues pertaining to emissions, energy efficiency and other factors.

In addition to providing research, some firms have created investment strategies and indexes based on concerns about climate change.  One notable firm that has been doing so is KLD Analytics, which operates a Global Climate 100 Index (GC 100) that invests in companies “whose activities demonstrate the greatest potential for mitigating immediate and long-term causes of climate change.”  According to the KLD website, the Index was created “in response to growing demand from institutions and individuals for investment strategies that address global warming.”  Since inception (7/1/05), this index has achieved returns of roughly 22.00%.

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