Universal Ownership: Why Environmental Externalities Matter to Institutional Investors
PRI, UNEP Finance Initiative and Trucost
Large institutional investors are, in effect, "universal owners", as they often have highly diversified and long-term portfolios that are representative of global capital markets. Their portfolios are inevitably exposed to growing and widespread costs from environmental damage caused by companies. They can positively influence the way business is conducted in order to reduce externalities and minimise their overall exposure to these costs. Long-term economic wellbeing and the interests of beneficiaries are at stake. Institutional investors can, and should, act collectively to reduce financial risk from environmental impacts.