Best ETFs To Combat Climate Change

Climate change risks are gaining increasing attention from investors, financial institutions and asset managers. The latest example of how devastating climate change risks can be is the Australian bushfires. The fires have claimed 25 human lives, burnt down over 12 million acres and wiped out around one billion animals.

It is being rapidly acknowledged by officials that climate change risks can have huge detrimental impacts on financial markets. In this regard, the president of the Federal Reserve Bank of San Francisco has commented that “higher sea levels, heavier rainfalls, dryer conditions, and the associated fallout can cause catastrophic losses to property and casualty insurers.” In fact, the governor of the Bank of England and former chairman of the G20’s Financial Stability Board, Mark Carney, is urging corporations to measure, publish and tackle climate risks by conducting stress tests.

Certain M&A deals are also highlighting the increased focus on climate change risk assessment. In October 2019, MSCI Inc.’s subsidiary MSCI Barra (Suisse) Sàrl completed the acquisition of Zurich-based environmental fintech and data analytics firm specializing in climate change scenario analysis, Carbon Delta AG in order to expand MSCI’s climate risk assessment capabilities. Moreover, in November 2019, S&P Global made the move to acquire the ESG Ratings Business from RobecoSAM

The world’s largest asset manager, BlackRock has joined more than 370 global investors in the Climate Action 100+ initiative. This initiative with more than $41 trillion in total assets under management targets to urge companies varying from fossil-fuel producers to consumer-product conglomerates to become carbon-neutral by 2050. In fact, the companies that finance fossil fuel producers are increasingly coming under the radar along with those related to oil, gas and mining industries.

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