Opinion editor’s note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
Minnesota Auditor Julie Blaha is pushing for the state to adopt what are known as ESG investment guidelines, short for Environmental, Social, Governance. Quietly, more corporations of all sizes have begun adopting these same principles to guide their investment portfolios. It’s a welcome development.
So what does ESG investment mean? Like all investments, it’s about calculating risk and return. Increasingly — especially when it comes to climate — corporations are viewing fossil fuel investments as having increased risk.
“Investors are moving away from polluters,” Blaha told an editorial writer. “The evidence is clear that it makes sense to consider climate when making investments, to move away from fossil fuels and toward a net-zero carbon impact. Polluters are going to be more heavily regulated and pose a greater risk. It just makes good economic sense as the market changes.”
The State Board of Investment (SBI) manages state assets and is also responsible for several statewide retirement systems and other investment plans. Recently, the board introduced formal recommendations that respond to climate change.
A three-part SBI report on climate change lays out evidence that rising global temperatures are changing the level of risk for some investments and recommends that factoring in climate change is a critical long-term strategy for protecting investment funds.
“We have the data, we have options and now it’s time to choose a course of action,” Blaha said. “We have an obligation to protect the state’s investments and the pension funds for government workers, teachers, nurses and others who depend on us to make wise decisions.”
The roll call of corporations that have adopted ESG guidelines features some of the biggest names: Microsoft, Nike, Accenture, Texas Instruments, Motorola, Hewlett-Packard, Adobe, Apple, Eli Lilly and thousands more. It is not limited to any one sector or type of business. These are all companies looking for strong stock performance and growth. They’ve found that focusing on ethical, environmental and socially responsible values can be enhancements, not detriments.
Billionaire Michael Bloomberg has become a champion for investments that consider climate change. He founded the Task Force on Climate-Related Financial Disclosures, which has gotten thousands of companies to provide data on emissions and exposure to climate risks voluntarily.
“These and other firms want to be able to price climate risk into their investment decisions, and without accurate and reliable data, they can’t do that,” Bloomberg wrote in a piece for Bloomberg …….