The evolution of UK institutional investor interest in climate change*
This chapter reviews the evolution of UK institutional investor interest in climate change, focusing in particular on the relative contributions of 'soft' policy measures such as information disclosure and awareness raising, and 'hard' policy measures such as regulation and market-based instruments. The chapter describes the broader implications of the findings for government efforts in the UK and elsewhere to encourage investors to play a more proactive role in the climate change debate. The chapter discusses the barriers to the greater integration of climate change concerns into investment decision-making and the potential for institutional investors to contribute to public policy efforts directed at reducing greenhouse gas emissions. There are a number of reasons why climate change risks and opportunities are, even now, not being fully factored into mainstream investment analysis. The two most important are the practical difficulties in assessing the financial implications of climate change and the short-term nature of investment mandates.