{"id":10421,"date":"2021-10-12T13:00:30","date_gmt":"2021-10-12T17:00:30","guid":{"rendered":"http:\/\/www.cambridgeassociates.com\/insight\/investing-for-climate-justice-an-intersectional-approach\/"},"modified":"2023-10-23T22:49:41","modified_gmt":"2023-10-24T02:49:41","slug":"investing-for-climate-justice-an-intersectional-approach","status":"publish","type":"post","link":"https:\/\/www.cambridgeassociates.com\/en-eu\/insight\/investing-for-climate-justice-an-intersectional-approach\/","title":{"rendered":"Investing for Climate Justice: An Intersectional Approach"},"content":{"rendered":"

Climate change and social inequality are two material and systemic risks facing the global economy and investment portfolios over the coming decades. Market-driven solutions to each issue offer tremendous opportunities for investors. But rather than viewing climate change and social inequality solutions through distinct lenses, investors should approach them via an intersectional lens. This approach involves drawing out the connections between climate change and social inequality and using them to generate actionable investment ideas through an inclusive process.<\/p>\n

In this paper, we demonstrate that climate change is also a social justice issue, given its disproportionate impact on women,<\/span> 1<\/a><\/sup> people of color, lower income communities, and developing countries. We outline ways in which investors, including those pursuing a path to net-zero greenhouse gas emissions, <\/a>can implement an intersectional approach to climate justice in portfolios, both holistically across themes and within each asset class. Lastly, we outline three steps investors should consider to help ensure our transition to a low-carbon economy is inclusive and just. Ultimately, we believe all investors would benefit from understanding the risks and opportunities associated with climate justice.<\/p>\n

The Intersection of Climate and Social Justice<\/h3>\n

While the physical and transition risks of climate change are now familiar themes for investors, more focus is needed on the disproportionate impact of climate change on women, people of color, lower income communities, and developing countries.<\/span> 2<\/a><\/sup> Climate change acts as a powerful accelerant to existing social and economic injustices and vulnerabilities. This acceleration only further destabilizes the broader socioeconomic systems upon which capital markets depend.<\/p>\n

Women\u2014particularly historically marginalized women<\/span> 3<\/a><\/sup> who continue to be affected by the history of colonialism, racism, and inequality\u2014are more vulnerable than men, in part because they represent the majority of the world\u2019s poor and are proportionally more dependent on threatened natural resources.<\/span> 4<\/a><\/sup> Many lack access to opportunities for improving and diversifying their livelihoods and have low participation in decision making. Additionally, as climate change reduces crop and forest yields and increases acidification of the ocean, the care burden of household chores such as collecting water and firewood become more difficult, dangerous, and time consuming\u2014crowding out opportunities for other activities such as education. Extreme heat and humidity, worsened by climate change, also exacerbate health outcomes for marginalized workers in agriculture and construction, reducing labor productivity and further stressing already cost-burdened healthcare systems.<\/p>\n

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Intersectionality<\/strong> describes the interconnected and overlapping systems of discrimination across social categorizations such as race, class, and gender. Climate\u2019s disproportionate impact on the underrepresented is a key factor in the discussion of intersectionality. The term intersectionality was coined by Kimberl\u00e9 Williams Crenshaw in 1989.<\/p>\n<\/div>\n

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Because of racial discrimination in environmental policymaking\u2014also known as environmental racism<\/span> 5<\/a><\/sup> \u2014people of color are more likely to live near sources of contamination and away from clean water, air, and soil, exposing them to the brunt of the impact of climate change. For example, an outsized number of fossil-fueled power plants and refineries are positioned in Black American neighborhoods, leading to poor air quality and heightened negative health consequences.<\/span> 6<\/a><\/sup> This proximity to pollutants of all kinds dramatically increases incidences of cancer, asthma,<\/span> 7<\/a><\/sup> stroke, and heart disease,<\/span> 8<\/a><\/sup> thus putting a strain on health and economic systems across the globe.<\/p>\n

Climate Justice Investment Opportunities<\/h3>\n

Recognizing the scale of the climate justice challenge, public policy and philanthropy will play an important role. But market-driven solutions, when properly designed and implemented, can work alongside public commitments to accelerate solutions. The landscape of investable opportunities in climate justice, while still nascent, is growing. Across asset classes, leading managers are intentionally incorporating climate justice into their strategy. Available fund investments are varied and include climate-focused managers with a social lens, social-focused managers with a climate lens, or certain generalist managers with exceptional environmental, social, and governance (ESG) implementation processes. Below, we highlight recent examples we\u2019ve seen in the marketplace for five major asset classes.<\/p>\n

CLIMATE JUSTICE INVESTMENT OPPORTUNITIES BY ASSET CLASS<\/strong><\/p>\n

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Source: Cambridge Associates LLC.<\/p>\n<\/div>\n

In addition, allocators can approach climate justice holistically by considering a single theme across asset classes, geographies, and sectors. A blend of this approach, along with asset class\u2013specific approaches and the engagement strategies we discuss later in this paper, should serve investors well. A few examples of climate justice themes that cut across asset classes include:<\/p>\n