Accountability for Investors

People should be able to invest for their futures without worrying about reckless risk or how their investments might make climate change worse.

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People should be able to invest for their futures without worrying about reckless risk or how their investments might make climate change worse. Everyone should have access to full reliable information that allows them to make decisions about the best financial products and services for them. 

While the risks for investing directly in coal, oil and gas companies are more well known, the industries that support these companies pose risks that are less understood. Individuals may not know that insurance companies and banks in their portfolios are providing loans, financing, and insurance policies that are essential to allowing current projects to continue and new dangerous ones to be started and developed.

These investors are unwittingly exposed to climate risk because of the action of these supporting institutions.

For example: 

  • By insuring fossil fuel projects, major insurance companies are increasing the likelihood of insured losses from climate change-related natural disasters. 
  • Banks that continue to finance fossil projects may suffer significant losses as the world moves away from carbon energy and the value of those projects plummets. The Intergovernmental Panel on Climate Change (IPCC)’s report in April 2022 projected up to $4 trillion in stranded fossil fuel assets as the world works to address climate change. Which means continued financing of fossil fuel projects is bad for bank profitability and shareholder value.
  • In addition, climate risk created by the financial sector will be experienced by companies across all industry sectors which may depress the value of virtually all assets.

All companies should start by disclosing and assessing financial risks posed to their investors and consumers by climate change. 

They should then take the needed steps to eliminate or reduce those risks to protect their investors and consumers from climate risk. 

A solution that both protects consumers and curbs climate change is to stop fossil fuel enabling companies and end their support of the coal, oil and gas industries’ current and future operations. 

U.S. PIRG is mobilizing consumers across the country to hold insurance companies, big banks, and other companies accountable to shareholders by

  • Working with Green Century Capital Management, the PIRG affiliated mutual fossil fuel free mutual fund company, to target major insurance companies – Chubb, The Hartford, and Travelers – to insure a fossil fuel free future. 
  • Campaigning for Congressional passage of the Fossil Free Finance Act, which would require big banks to stop financing fossil fuel emissions by 2050, and meet interim milestones along the way. 
  • Making sure the Securities and Exchange Commission (SEC) does its job to provide investors information about climate-related risks and environmentally-marketed investments for all publicly-traded companies.
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Authors

Mike Litt

Director, Consumer Campaign, PIRG

Mike directs U.S. PIRG’s national campaign to protect consumers on Wall Street and in the financial marketplace by defending the Consumer Financial Protection Bureau, and works for stronger privacy protections and corporate accountability in the wake of the Equifax data breach. Mike lives in Washington, D.C.

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