Content written by Kimmy Wan
A recent Allianz Life Insurance Co study indicated that 77% of millennial, 64% of Gen Xer and 61% of boomer investors are interested in sustainable and ethical investing. It shows how important it is for major energy companies to commit into investing themes such as climate change and product liability in order to attain new shareholders.
What are the benefits for an energy company to disclose the climate change?
Companies show value by researching climate change assessments, risk metrics, and targets rather than relying on third party research, government contracts or tax advantages to make executive decisions, which can promote shareholder trust and loyalty.
When a company is committed to a self-initiated TCFD (Task Force on Climate-Related Financial Disclosure) with the goal of addressing climate related risks, it creates the ethical framework to meet its fiduciary duties and therefore could avoid unnecessary litigation costs.
Questions an investor should ask when evaluating an energy company and climate change disclosures:
1. What are the steps and initiatives a company are taking to support and educate the general public with information such as chemical safety, health, and demographic risk?
2. What are the company’s plans to finance the carbon pricing programs and pay for the investment costs, given the recent weak earnings forecast?
3. What are the potential government regulations or other hurdles to successfully execute the climate change resilience?
4. What about the other social elements? How is this going to help the labor market? How is this going to boost the stock price?
5. What are the current metrics for the Board of Directors? Does the Board include different genders, ethnicities and areas of expertise to add dynamic collaboration during the executive decision making process?
Truly, with self-disclosed climate change mitigation and adaptation, an energy company can bring real intrinsic value and sustainability for the company and its investors.
Kimmy Wan has more than 20 years of experience in the financial services industry.
Kimmy graduated from California State University, Sacramento in 1998 with a B.S. in Finance and Economics and then obtained her M.B.A. in Finance from the University of Phoenix. She has been a Vice President-Sr. Financial Consultant, Manager of Asia Pacific Relationship Management and a Mutual Fund Operation Analyst for financial corporations. Kimmy is an expert wealth advisor in helping those who are retired as well as those planning for retirement. Kimmy specializes in modern portfolio management, risk management, financial planning, and investment strategic planning. Kimmy has native fluency in Chinese Mandarin and Cantonese.
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