Aviva Investors has commissioned a report which proposes environmentally hostile activities result in higher insurance premiums for companies.
Forum for the Future this week launched the ’Sustainable economy in 2040; a roadmap for capital markets’ report, which calls for the prioritisation of environmentally sustainable investments.
The report outlines a series of actions, including issuing penalties through insurance companies. For example, companies that encourage “systemic risk by contributing to climate change” should suffer higher premiums, says the report, which would generate a knock-on effect on fund managers.
Greater transparency in company accounts is critical to progress and should be accompanied by both financial incentives and penalties.
Alice Chapple, the director of sustainable financial markets at Forum for the Future, suggests the government could lend support such as tax relief to portfolios that demonstrate sustainable strategies.
As well as adjusting attitudes, financial institutions should work on developing instruments which strengthen the notion of sustainable investments.
The report suggests the creation of green bonds, in response to global warming, in order to raise a proportion of the £2.5 trillion of capital required to build low-carbon infrastructure in Europe before 2020.
The position of the investor can be summarised as taking more active roles in requesting sustainable investment strategies.