Environmental Alpha: Institutional Investors and Climate Change

Climate change will present institutional investors with both complex risks and dynamic opportunities in the years ahead. This situation has the potential to affect many sectors in radically different ways and to varying degrees over time. Institutional investors need to have a thorough understanding of the multidimensional risks and opportunities that could influence nearly every investment in their portfolios.

While Environmental Alpha has value for all investors, it was specifically written for institutional investors—defined pension funds, endowments, foundations, insurance companies, and superannuation funds—with delegated investment responsibilities. The information found here will enhance your understanding of environmental investments, as well as the excess returns, or “alpha,” their strategies offer, and put you in a better position to prudently direct and commit capital in the face of continuous climate change.

Composed of four parts—Introduction to Climate Change Issues and Consequences, Climate Change and Institutional Investors, Environmental Alpha: The Investment Case for Climate-Related Strategies, and Practical Considerations—each of which contains contributions by leading experts in the environmental investing arena, this comprehensive guide moves beyond many of the theoretical or academic discussions on the topic to provide you with real-world insights into an emerging market.

Page by page, Environmental Alpha:

• Examines the climate change–related drivers of returns (science, economics, policy and regulation, and technology) that make environmental alpha possible
• Explores fiduciary duty and climate changeContains in-depth explanations of each of the major categories of environmental investing and examines related environmental alpha opportunities
• Discusses practical implementation issues
• Presents real-world case studies and detailed examples

Climate change will be one of the most important investment themes of the next twenty years. The related environmental investment opportunities will provide institutional investors with some of the greatest “alpha” opportunities for years to come. This book will provide you with a framework for effectively assessing and accessing these opportunities.

Praise for Environmental Alpha

“Dr. Calvello defines an emerging global theme and creates a framework for reconstructing portfolios based on the incentives of producing investment alpha. This compendium of leading experts dispels the notion of environmental investing as a socially responsible niche market and places it squarely at the center of investment strategies for the next decade.”—Stuart Mason, Chief Investment Officer, University of Minnesota

“Angelo Calvello has compiled a very readable collection of essays on climate change and investing. This book is an excellent overview of the topic and covers a broad array of questions in an accessible way.”—Erik Valtonen, Chief Investment Officer, AP3

“In Environmental Alpha, Dr. Calvello has provided an invaluable resource for institutional investors. With clear and unambiguous language, the reader is introduced to the concepts and nomenclature regarding climate change. From there, experts from across the field discuss potential consequences for the economy, risks for investors, and ultimately, opportunities.”—William R. Atwood, Executive Director, Illinois State Board of Investment

“Environmental Alpha should be considered the definitive primer to uncovering investment opportunities that are hiding inside the worldwide push to solve global climate change.”—James J. Dunn, Vice President and Chief Investment Officer, Wake Forest University

“Environmental Alpha explains the science, politics, and the range of investment opportunities that investors in climate change strategies need to know. Fiduciaries who need to understand how green investing has moved from the realm of socially responsible investments to financially feasible investments need to read this book.”—Keith H. Black, CFA, CAIA, Associate member of the Opportunistic Strategies and Green Investments Manager Research Teams, Ennis, Knupp + Associates

“In Environmental Alpha, Angelo Calvello combines thoughtful analysis and investment experience to guide investors through the challenges and opportunities presented by climate change.”—Kerry Brick, Manager of Pension Investments, Cargill

“Dr. Calvello provides a strong resource for institutional investors. His work supports our view that environment, specifically climate change, is a key macro factor impacting investment themes.”—Sarah Cleveland, Senior Consultant, Watson Wyatt Investment Consulting

“Informative and practical, Environmental Alpha is a rich informational resource for environmental investing—an area that cannot be ignored by today’s asset owners and asset managers.”—Kathryn Wilkens-Christopher, PhD, CAIA, Director of Curriculum,Chartered Alternative Investment Analyst Association®