Green investments a legal responsibility, say UN and top asset managers

14 July 2009

‘Green’ investments are no longer just a luxury, but are now a legal responsibility, according to a new report by the United Nations Environment Programme (UNEP) and a powerful group of asset managers controlling some $2 trillion in assets.

‘Green’ investments are no longer just a luxury, but are now a legal responsibility, according to a new report by the United Nations Environment Programme (UNEP) and a powerful group of asset managers controlling some $2 trillion in assets.

The 120-page publication released today argues that if investment consultants and others do not incorporate environmental, social and governance (ESG) considerations into their services, they face “a very real risk that they will be sued for negligence.”

It also stressed the central role that the world’s largest institutional investors – including pensions funds, insurance companies, sovereign wealth funds and mutual funds – have in easing the transition to a low-carbon and resource-efficient green economy.

“ESG issues are not peripheral but should be part of mainstream investment decisions-making processes across the industry,” said UNEP Executive Director Achim Steiner.

Further, he noted that creative market mechanisms and other incentives can help to ensure that as investors return to markets after the current financial turmoil ends, they will put their funds into a greener economy and not the “brown economy of yesterday.”

The new report, entitled “Fiduciary Responsibility: Legal and Practical Aspects of Integrating Environmental, Social and Governance Issues into Institutional Investment,” was produced by Asset Management Working Group of the UNEP Finance Initiative (UNEP FI), a partnership between the agency and more nearly 200 financial institutions around the world.

It was launched on the eve of the annual Principles for Responsible Investment (PRI) event in Sydney, Australia, which will draw many of the largest institutional investors.

Almost 600 institutions, representing over $18 trillion in assets, have signed up to the PRI, a joint effort between the UNEP FI and the UN Global Compact, a voluntary initiative to promote corporate citizenship which currently involves over 5,000 companies across 130 countries.

 

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