PETALING JAYA: The global investing community is moving away from businesses that affect climate change, as reflected in the number of signatories to the Principles for Responsible Investment (PRI), which rose from 63 in April 2006 to 1,961 in April 2018.
According to RAM Ratings, biodiversity and climate change, which are increasingly gaining traction with the global investing community, will underscore how money flows in the future.
The rating agency said that the global swell in PRI signatories translates into a surge in assets under management, from US$6.5 trillion (RM27.2 trillion) to US$81.7 trillion (RM342.3 trillion) over the same period.
The PRI is supported by the United Nations and its signatories pay close attention to Environment, Social and Governance (ESG) issues as part of their investment due diligence.
“Globally, investors and banks are shifting away from businesses that are harming biodiversity or contributing to climate change,” RAM Ratings deputy CEO Promod Dass said at the Sustainable Infrastructure Day, Rio Conventions Pavilion at the UN Convention on Biological Diversity, 14th Conference of the Parties (COP-14) Sharm el-Sheikh, Egypt.
COP-14 is a major global biodiversity event which essentially brings together governments, scientists, multilateral developmental banks, non-governmental organisations and a wide range of stakeholders to call attention to issues and seek solutions.
The Sustainable Infrastructure Day helped launch two weeks of discussions on the need to mainstream biodiversity into development processes.
During the event, panelists highlighted the coming wave of infrastructure projects; including biodiversity considerations at the outset of planning processes; using natural capital to maintain connectivity; and the roles of finance and industry engagement in developing sustainable projects.
“Integrating ESG into credit analysis is rapidly gaining ground in the US$100 trillion global bond market,” said Dass.
On May 26, 2016, RAM Ratings joined the global lineup of six pioneer credit rating agency signatories to PRI’s Statement on ESG in Credit Ratings (PRI ESG Statement).
Today, the PRI ESG Statement is supported by more than 140 investors with over US$27 trillion of collective assets under management, and 18 credit rating agencies.
