Economics and Finance
Response to Imperial's call for evidence on a Socially Responsible Investment Policy
Topics: Economics and Finance
Type: Evidence & submission papers
Publication date: January 2020
Authors: The Grantham Institute
The Grantham Institute submitted this response to Imperial's call for evidence on a Socially Responsible Investment Policy.
We welcome the establishment of the Imperial College Socially Responsible Investment Policy Working Group and hope the College will take this opportunity to make leading, bold and appropriate decisions.
It is financially astute to invest in businesses that are addressing the challenges of climate change and sustainable development. The evidence to support this has been assembled and analysed by the OECD and Bank of England. Put at its bluntest by Mark Carney, the outgoing Governor of the Bank of England, those businesses and investors who ignore climate change and do not inform their business and investment decisions accordingly will cease to trade. Much of Imperial’s business depends on the value of the leadership it provides through its research and education. Our investment portfolio holds a mirror up to our internal values and judgement. These currently appear to be inconsistent with our research, our teaching and at odds with investment advice from the Bank of England.
The Grantham Institute maintains that it is essential for the College to invest only in companies whose activities are consistent with achieving the Paris Climate Change Agreement to limit temperature rises to well below 2oC above pre industrial levels and more generally to invest only in companies with high, verifiable and transparent Environmental, Social and Governance (ESG) standards. Such environmental standards would likely include consideration of the impact of a company’s activities on ecological biodiversity, natural resource conservation (e.g. water and soil) and the treatment of animals, for example. This approach is likely to exclude a number of companies from our investment portfolio but will reward others that are tackling climate change and wider environmental issues strategically and at the necessary scale.
In this submission, we outline the scientific, moral, financial and reputational reasons for adopting such a position and the opportunities that it brings.
[Image credit: Imperial College London]