In Brief: The Core Carbon Principles

“The Core Carbon Principles” is a joint effort by the Investment Consultants’ Climate and ESG Working Group (ICCEW) and the Institutional Investors Group on Climate Change (IIGCC). In order to assist investors and investment consultants in incorporating climate change considerations into their investment decisions, the report offers a framework of five principles.  

The report’s first main principle is that “Climate change is a systemic risk that must be taken into account when making investment decisions.” This principle emphasizes the necessity for investors to comprehend the major risks that climate change poses to the financial system and the need to account for these risks when making investment decisions. 

“Investors should consider the impact of climate change on the long-term financial performance of investments,” asserts the second fundamental principle. The importance of assessing the long-term financial effects of climate change on investments is highlighted by this principle, which also underscores the need for investors to adopt a more forward-looking approach to investment decision-making. 

The third principle states, “Investors should be transparent about how they incorporate climate change considerations into their investment processes.” This principle points out the importance of transparency in the decision-making process for investments. It requires investors to disclose how they consider climate change before making investments. 

“Investment consultants should have the knowledge and expertise to advise on climate change risks and opportunities,” suggests the fourth principle. This principle reaffirms the essentiality for investment consultants to acquire the necessary abilities and expertise to counsel clients on the risks and opportunities linked to climate change. 

“Investors and investment consultants should collaborate to ensure effective integration of climate change considerations into investment decision-making” is the fifth and final fundamental principle. This idea emphasizes how crucial it is for investors and investment consultants to work together to incorporate climate change factors into investment decision-making effectively. 

Overall, the report offers a simple and convenient framework for investors and investment consultants to use when integrating climate change factors into investment decision-making. The report’s principles are a valuable reference for investors and investment consultants looking to incorporate climate change considerations into their investment processes.