Policies to support environmental risk management in investment decisions
by Edward B. Barbier; Joanne C. Burgess
International Journal of Global Environmental Issues (IJGENVI), Vol. 17, No. 2/3, 2018

Abstract: Investors are increasingly requiring assessments of environmental risks arising from climate change, natural resource scarcity and pollution. Improved environmental risk management also lowers the total cost of capital of firms, thus making them more attractive to investors. We illustrate this relationship by demonstrating how greater environmental risk may increase a firm's after-tax cost of capital. However, better environmental risk management by firms requires a range of complementary policies. The rules governing the financial system should support investment decision-making that takes into account environmental sources of risk and opportunity. Central banks can advance this objective by establishing environmental risk management and reporting requirements and adjusting capital provisioning to account for underpriced environmental threats. There is also a need to develop international guidelines and common policy and legal frameworks to support and streamline such initiatives. Developing such a policy strategy is likely to produce a self-reinforcing gain to firms, investors and society.

Online publication date: Mon, 16-Apr-2018

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Global Environmental Issues (IJGENVI):
Login with your Inderscience username and password:

    Username:        Password:         

Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com