Climate Change and Your Investments

Climate Change and Your Portfolio

This week’s reader question:

How should I factor climate change into my investment strategy? How does Adviser Investments manage this portfolio risk?

Climate change is a consideration for many investment managers, including us. But after evaluating the findings in the United Nations report released last week, it’s safe to say that this weighty issue is about to become even more of a factor when assessing and selecting long-term stocks. The report, released by the Intergovernmental Panel on Climate Change, marshals research conducted by thousands of scientists from all over the world. It reveals not only that irreparable damage has already been inflicted on our planet by humans, but also what we can do to try to stem the tide for future generations.

On the heels of that bittersweet message, the Biden administration is trying to pass legislation that would put more dollars and support behind the push for renewable energy and cutting carbon emissions in half by 2030.

If the legislation succeeds, the obvious beneficiaries are renewable energy companies. On the flip side are a small number of companies responsible for most of the fossil fuel emissions around the world, including big oil, energy and coal companies. They would come under increased pressure and could see their costs increase to meet lower emission mandates.

Liz Laprade is pictured with the quote: "Companies that fail to comply with environmental mandates or don’t try to aid the world in minimizing fossil fuels... are less likely to make the cut with our fund managers."

Investors need to be aware that climate risks are likely to compound in the years ahead. As always, we invest in active managers who we believe are among the best stock pickers in their respective areas of expertise. And a big part of the process for them is evaluating corporate leadership practices and gauging how companies are preparing for rising risks. As such, our managers are accustomed to considering the winners and the losers within the environmental impact pillar of ESG investing.

Simply put, companies that fail to comply with environmental mandates or don’t try to aid the world in minimizing fossil fuels will suffer and are less likely to make the cut with our fund managers.

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About Adviser Investments

Adviser is a full-service wealth management firm, offering investment managementfinancial and tax planningmanaged individual bond portfolios, and 401(k) advisory services. We’ve been helping individuals, trusts, institutions and foundations since 1994. Adviser Investments and its subsidiaries have over 5,000 clients across the country and over $8 billion in assets under management. Our portfolios encompass actively managed funds, ETFs, socially responsible investments and tactical asset allocation strategies, and we’re experts on Fidelity and Vanguard mutual funds. We take pride in being The Adviser You Can Talk To. To see a full list of our awards and recognitions, click here, and for more information, please visit or call 800-492-6868.

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