Publication / 05 Oct 2010

Universal Ownership: Why Environmental Externalities Matter to Institutional Investors (full report)

The UN-backed Principles for Responsible Investment and UNEP Finance Initiative commissioned Trucost to calculate the cost of global environmental damage and examine why this is important to the economy, capital markets, companies and institutional investors.

This report helps investors measure the unaccounted costs of business activities by putting a price on natural resources that power business but rarely show up on corporate balance sheets. This study provides an important rationale for action by large institutional investors that have a financial interest in the wellbeing of the economy as a whole.

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 minimize 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.

The results are that the estimated annual environmental costs from global human activity is US$6.6 trillion, equating to 11% of global GDP in 2008. The cost of environmental damage caused by the world’s 3,000 largest publicly-listed companies in 2008 was US$2.15 trillion. More than half of company earnings could be at risk from environmental costs in an equity portfolio weighted according to the MSCI All Country World Index.

28 January, 2020
Events Uncovering Business Value from Environmental, Social and Governance Factors, Webinar, 28th January 2020

More than ever companies are measuring and disclosing their performance around environmental, social and governance (ESG) issues. By doing this, companies are able to reduce financial risks and uncover business opportunities. Moreover, record amounts of capital are flowing towards companies who do good. In this webinar you will learn: • The current sustainability landscape...

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3 February, 2020
Events Green Finance Summit – Phoenix – 3 – 4, 2020

The GreenFin Summit follows a successful launch event in 2019. That invitation-only event brought together 100 corporate sustainability leaders, major public-sector pension fund executives and leading financial institutions, with over a trillion dollars of combined assets under management. The discussion broached vital topics in ESG that will be expanded upon at the 2020 Summit. Richard Mattison...

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Events Achieving Results: In Corporate Strategy Today & Materiality Assessment Workshop – Arizona – 22nd & 23rd January

The AHC Group “Achieving Results” leadership workshop series is a process of transformational corporate learning, featuring the experiences and innovations of our Senior Associates, clients, and many of our leading global Corporate Affiliate Program member organizations. Brian Werner – Head of Business Development NFC, Americas at Trucost, part of S&P Global will be speaking at this event. For...

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