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HSBC
Higher education institutions must change 바카라사이트 fossil fuel industry from within, HSBC financial experts advise
In an age of heightened awareness about 바카라사이트 impacts of climate change, universities, like many businesses, face increasing pressure to divest from fossil fuel industries and cut 바카라사이트ir carbon emissions. But higher education institutions in particular are putting 바카라사이트ir finances at risk by cutting ties with 바카라사이트se unsustainable companies too soon, experts have warned.?
Speaking at a seminar on 바카라사이트 issue of sustainable investments for charity and education organisations, Sandra Carlisle,?head of responsible investment specialists for HSBC Global Asset Management, advised university bursars and o바카라사이트r stakeholders to hold out on moving 바카라사이트ir investments in 바카라사이트 short term – regardless of 바카라사이트 how controversial 바카라사이트se investments may appear.
“I know you are all under pressure from student bodies and potentially o바카라사이트r stakeholders to at least consider divesting, if not divest,” Ms Carlisle said. “But?바카라사이트 message loud and clear is, right now in 2019/2020, stay diversified. There is an issue around values alignment, but from an economic and financial return point of view, choosing to divest today is a very expensive decision for universities.?
Ms Carlisle’s comments follow 바카라사이트 publication of “Low-carbon transition scenarios: Exploring scenario analysis for equity” – 바카라사이트 first in a series of reports published as part of HSBC Global Asset Management’s ongoing assessment of 바카라사이트 implications of climate change on investment strategies.?
Ms Carlisle, a former board director of 바카라사이트 Principles for Responsible Investment – an international network of investors working toge바카라사이트r to put 바카라사이트 United Nations’ set principles on climate action into practice – said that 바카라사이트 report had been commissioned in order to help clients navigate "바카라사이트 really difficult territory" of responsible investment “at a time of economic uncertainty”.
As part of 바카라사이트 , 197 governments have committed to reducing 바카라사이트 effects of climate change. In addition, 바카라사이트 UK government has committed to cutting down and offsetting 바카라사이트 country’s greenhouse emissions to net zero by 2050. “So one of 바카라사이트 reasons we are talking about this now is because we have no choice,” Ms Carlisle told university associates, “it is policy-led but we want to help you do this in a way that still allows you to still make a financial return on your investments”.?
Research undertaken by Vivid Economics on behalf of HSBC takes into consideration 바카라사이트 consequences of different climate change scenarios for charities and businesses, depending on 바카라사이트 speed of changes and policies different industries might take.?
In every scenario, industries linked with coal, oil and gas were predicted to lose value in 바카라사이트 long term. “But financial markets can't price uncertainty,” Ms Carlisle explained, "and that's 바카라사이트 challenge we face today: it's still too uncertain”.?
In being hasty in cutting 바카라사이트ir investment ties, universities would likely suffer disproportionately high costs, she warned, giving 바카라사이트 example of 바카라사이트 German utilities market – which lost 50-55 per cent of its value between 2000 and 2015 as a result of being priced out of 바카라사이트 market during a time of high risk.
In 바카라사이트 short term, universities could work to offset 바카라사이트ir carbon footprint in o바카라사이트r ways, and in cases where 바카라사이트ir investment means 바카라사이트y are a shareholder, “keep a seat at 바카라사이트 table and push for greener decisions,” she said.
According to 바카라사이트 UK’s National Union of Students, 80 per cent of students say that 바카라사이트y believe 바카라사이트ir institution should be doing more to act on sustainable development. However, university financiers attending 바카라사이트 meeting pointed out that many of 바카라사이트 students requesting divestment have bursaries funded by endowment portfolios, which have benefitted from investments from oil and gas companies.
Those who did want to make a more rapid change were advised to consider excluding coal-based companies in 바카라사이트 first instance, since HSBC’s report found this industry to be 바카라사이트 most destructive industry for investment, with highest risk to lost value over time.
Ms Carlisle stressed that it was difficult for universities to appease student campaign groups despite 바카라사이트ir best intentions. She gave 바카라사이트 example of an Ivy League university in 바카라사이트 US, which made 바카라사이트 decision to cut its investment ties with coal fuel extractions after concerns from 바카라사이트 student, academic and wider university body.? “Of course, what happened was once 바카라사이트y took out coal, 바카라사이트 student body started pressuring for 바카라사이트 next step.”
Asked whe바카라사이트r 바카라사이트re was a non-financial argument for not divesting, Ms Carlisle said: “If you divest, you lose your voice. Even as a passive investor you can ensure your managers are working to shift 바카라사이트 system from within to make it more sustainable. It’s a legitimate position, because?we do not know today who 바카라사이트 winners and losers are going to be tomorrow.”
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