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 Full integration of sustainability into financial markets needed

Unforeseen and devastating world events such as the Japanese tsunami, the BP oil spill and heat waves in Russia are becoming more frequent and investors need to take notice.

Such disasters have demonstrated the need for institutional investors to integrate sustainability into their investment decision making.

Mitigating such risks is a crucial part of the future of investing. That’s according to Mindy S Lubber, President of Ceres and Director of Investor Network on Climate Risk (INCR). Lubber is a speaker at the marcus evans US Pensions Summit 2011 in Wheeling, Illinois on July 18-20.

Sustainability factors are becoming more dominant in our economy, Lubber said.

“Episodes such as what happened in Japan, the BP oil spill in the Gulf of Mexico, heat waves in Russia and the tsunamis over the last few years are becoming more commonplace. The Japanese tsunami is disrupting every sector of the economy. A full integration of sustainability into our financial markets is crucial. Sustainability should not be considered as an added bonus, but a fundamental part of the financial wellbeing of a company.”

Lubber says that corporations in the 21st century need to integrate sustainability at every level.

“We expect them to have oversight of sustainability issues at the governance level, to integrate sustainability into strategic planning and enterprise risk management, tie it to compensation and also into all their performance goals.

“What makes corporations strong, good fiduciaries and ensures long term shareholder value is governance for sustainability, stakeholder engagement, disclosure and performance. Large institutional investors are calling on companies to integrate sustainability into their day-to-day business, to determine whether they are managed in a way that maximises shareholder value.”

Sustainability is creeping more and more into the equation and recent weather patterns have brought this fact into sharp focus.

“Our economy is built on manufacturing products that use scarce resources. Not having enough of these resources is a real economic risk.

“Recent heat waves and droughts have had a profound impact on businesses and created huge blips in the economic sectors that are highly dependent on water and other natural resources. With more natural disasters forecasted for the future, those heavily invested in agriculture or products that require unlimited water supplies, are at risk. Mainstream investors are calling on companies to disclose their sustainability risks and set goals to address them.”

The marcus evans US Pensions Summit 2011 will take place in Wheeling, Illinois on July 18-20.





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