Rakhi Kumar is Senior Managing Director and Head of ESG Investments and Asset Stewardship at State Street Global Advisors. Related research from the Program on Corporate Governance includes Socially Responsible Firms by Alan Ferrell, Hao Liang, and Luc Renneboog (discussed on the Forum here).
Key Takeaways
- The COP21 Paris Climate Accord signals the turning point of a global effort to address climate change. As nations begin to pursue their emission reduction strategies, directors should evaluate the climate-related risks facing their companies.
- State Street Global Advisors believes that boards should regard climate change as they would any other significant risk to the business and ensure that a company’s assets and its long-term business strategy are resilient to the impacts of climate change.
- State Street Global Advisors has developed a framework to help directors evaluate potential climate-related risks that may impact companies within a sector.
- The three primary climate-related risks we have identified are physical risk, regulatory risk and economic risk.
- Climate change will continue to be a priority for our asset stewardship and company engagement program in 2016 as we seek to promote effective environmental and sustainability practices and better company performance on behalf of our clients and other stakeholders.
- Our guidance for directors is based on over 160 climate-related engagements we have had with companies over the past three years.