The Investing Impact of Climate Regulations with Steven Rothstein

The 7investing Podcast

Climate change has been a hot topic for several decades (and yes, pun intended). But are companies and their investors taking it as seriously as they should be?

There's a possibility that corporations, investors, banks, and insurers haven't sufficiently been addressing the climate-related risks that lurk within their balance sheets and business models.

That goes firstly for physical risks. There are climate-related wildfires, floods, or droughts that could cause significant damage to facilities or antiquated equipment.

There's also market-based risks associated with transitions in technology. An example is staying on top of the transition from internal combustion engines to electric vehicles. New vehicle fan belts and spark plugs aren't selling quite as well as they used to.

And finally, there are potential litigation risks. There are financial penalties associated with failing to comply with regulations.

All of these are risks that face companies every year. How should forward-thinking investors react to them?

To answer that question, we've brought in an expert. 7investing CEO recently spoke with Steven Rothstein, who is the Managing Director for the Ceres Accelerator for Sustainable Capital Markets. Steve and his team are helping a variety of stakeholders make better investing decisions with the ultimate goal of enabling a net zero economy.

In the first part of the conversation, Steve discusses the global regulatory framework and the disclosure rules for developed countries, and also explains how proactively addressing climate risks can protect many companies from the $165 billion of economic losses due to things like floods, fires, and tornadoes. 92% of the Fortune 500 are voluntarily disclosing the results of their climate-related initiatives. There are no mandatory disclosure laws in the United States, although it's being considered by the SEC.

A climate-related "scorecard" could be beneficial for investors as well, which could help investors identify the most climate-progressive companies in the market who could be less-exposed to unexpected lurking landmines. In the final segment of the show, Steve describes how his company has just released its most recent Climate Risk Scorecard on ceres.org.

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