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Industry Dialogues

How investors can engage industry-wide to increase sustainability disclosure and performance on issues ranging from carbon emissions and water use to safety and governance structures.

The unprecedented impacts of global climate change on both societies and economies pose unique risks to the investment community. As investors seek to manage this risk, INCR provides detailed expertise and facilitates company dialogues on a sector-by-sector and issue-by-issue basis.

Across each of these industries, INCR brings together investors, companies, and business leaders to support and promote policy and regulation that will drive the innovation and growth necessary for the development of a sustainable global economy.

Investors, as part of the Investor Network on Climate Risk (INCR), engage in the following industry working groups:

Electric Power

Electricity Meters on the side of a building.The power sector is the largest source of greenhouse gas (GHG) emissions in the U.S. and globally. To remain competitive, today’s electric utility company must respond to the risks and opportunities from climate change, carbon costs, volatile fuel prices, emerging clean technologies, expanding energy efficiency programs, increasing customer expectations and competing third party energy providers.

Investors strive to understand the long-term portfolio risks from the changes in this industry. The Electric Power Investor Working Group helps investors manage this risk and find solutions through the sharing of expert analysis and coordination of dialogues with companies, industry leaders, and policy-makers.


Insurance

Picture of Insurance BuildingClimate change and other sustainability issues pose risks to the insurance industry in at least two ways. First, the physical impacts of a changing climate (including sea-level rise, increased frequency of storms, and water scarcity) will have unprecedented effects on the underwriting criteria for insurance companies. Second, as major investors, insurance companies will need to figure out how to manage the significant risks to their own portfolios posed by climate change and other sustainability issues.

The Insurance Investor Working Group works to improve the disclosure of major insurance companies around climate and sustainability issues, so that investors have enough information to make prudent decisions. It also works with companies to integrate climate risk into underwriting criteria and engages with state and federal policy leaders.

Oil and Gas

Picture of oil well at sunset.As the tragedy in 2010 at the BP Macondo offshore drilling rig showed, there are significant environmental risks associated with oil and gas development. New extraction methods such as hydraulic fracturing, the expansion of oil sands development in Canada, and the movement into “frontier” offshore drilling sites all present risks to investors which compound the long-term risks of these fuel sources being high emitters of greenhouse gases and thus contributing significantly to climate change.

The Oil and Gas Investor Working Group seeks to understand this wide range of “externalities,” and work with large oil and gas companies to improve their risk management and sustainability practices.


Real Estate

Buildings with gardens and trees on top.Energy efficiency in the new and existing building stock represents a tremendous opportunity for both saving money through reduced energy costs and cutting greenhouse gas (GHG) emission. According to a report by McKinsey & Company, “the U.S. economy has the potential to reduce annual non-transportation energy consumption by roughly 23 percent by 2020, eliminating more than $1.2 trillion in waste—well beyond the $520 billion upfront investment…that would be required.”

The Real Estate Investor Working Group examines how this enormous potential for investment might be realized. It also explores how investors can manage the significant risks that climate change poses to a real estate portfolio, both from physical impacts and increased regulatory measures.


Transportation

DC Traffic Jam.The auto industry accounts for approximately 20 percent of greenhouse gas emissions in the United States. Regulations and subsidies at both the state and federal level are making impressive strides to reduce the impact of the transportation sector on climate change. Not only do these energy efficiency reforms reduce harmful emissions, but they also improve the energy security of the nation and reduce dependence on foreign oil import.

Members of the Transportation Investor Working Group seek investment opportunities as the auto industry exploits emerging electric vehicle and efficiency technologies. Investors also collaborate in engaging with policymakers at the federal and state level to promote stronger fuel efficiency standards moving forward.


Water

Water PipeWhile climate change poses a plethora of challenges for the global economy, none are as immediately present as water scarcity. Every company needs to address the real and present risks that a lack of water supply poses to their business, especially companies in water-intensive industries like electric power generators and food producers. Additionally, municipalities and utilities that provide water for households must also find solutions to a changing climate.

INCR members in the Water Investor Working Group grapple with how to manage the risk to their portfolios from water shortages that companies, governments, and individuals worldwide will have to face.