Innovest Invite

Innovest Strategic Value Advisors, rated the #1 global provider of "extra-financial" research by Thomson Extel and research provider for the Carbon Disclosure Project, has released a new study titled "Carbon Beta© and Equity Performance: Moving From Disclosure to Performance."

The study evaluates the relationship among climate change, companies’ ability to manage the associated risks and opportunities, and their financial performance. The analysis is the first of its kind in the world, and lays the foundation for further research and investment products.

Among the study’s key findings:

Companies’ risk exposures to climate change varies widely, both between and even within different industry sectors and geographic regions
Companies with the most robust risk management architecture and ability to seize competitive opportunities on the upside have tended to out-perform their same-sector peers financially over the past three years
The “Carbon Beta© premium” for leading companies appears to be growing larger over time, as regulatory regimes tighten around the world
Non-verified, company-provided information provides an extremely poor and limited basis for actual investment decisions. More in-depth company research is clearly required

Innovest founder and Chief Executive Matthew Kiernan commented:

“As the authors of each of the Carbon Disclosure Project global reports in the five years since its inception, we at Innovest are only too aware of the power and importance of company disclosure. However, we have also believed for many years that self-reported, non-verified data supplied by the companies themselves is, by itself, a woefully inadequate basis for actual decisionmaking by sophisticated investors. The results of this study would seem to bear that out.

With over $40 trillion in institutional investor assets now concerned about climate change (Carbon Disclosure Project, 2007), it is increasingly critical that performance-driven investors move beyond simply pressing for greater company disclosure. We are now seeing them begin to demand the sorts of investment tools, research, and products they need to turn mere information into superior investment decisions and performance. In addition, such tools will allow them to meet their growing responsibilities as 21st century fiduciaries. We hope that this study will be helpful in that regard.”