Mirovα: Creating Sustainable Value #1

Published on 09/09/2019

Understanding the markets, Investing, Engaging in dialogues, Measuring Impact...

Read the #1 of Mirovα: Creating Sustainable Value 

 

Mirova

Shareholder value and a preference for short-term prospects couldn’t take the heat this summer

A high pressure summer! 

Over the summer, we saw things heat up in more than one way: In July, a heatwave swept across Europe setting all-time high temperature records and the markets caught their fair share of heat as well. As a result of rising temperatures, the polar ice pack is melting at an alarming rate and natural disasters, such as wild fires and floods, are becoming more frequent and more extreme. But the market isn’t paying attention. How do we include a systemic risk in a valuation model using future flows? What’s truly terrifying is that, with the exception of the  sectors which are the most directly exposed –for example, producers of electricity and reinsurers– this major economic risk which will affect investments, may not be taken into account until it’s too late. The fact that the green and sustainable finance agenda will be subject to regulation, shouldn’t come as a surprise. In fact, we should be delighted. By publishing the EU taxonomy for sustainable activities, the European Commission has taken a decisive step forward in its plan to create standards and labels for ‘green’ financial products. We’re willing  to bet that investors will find a tool for putting a price on carbon, whether its emissions or avoided emissions.

G7 meeting