Last Friday (20 Sep) saw coordinated demonstrations around the world by young people angry at what they see as a lack of progress by governments and businesses in tackling climate change. This topic is becoming increasingly important to investors.

The latest data from the World Meteorological Organization shows that the five-year period from 2014 to 2019 is the warmest on record.

The amount of greenhouse gases going into the atmosphere actually rose by 20% in the last five years compared with the previous five years.

The oceans have absorbed 90% of the excess heat generated by global warming, fuelling a rise in temperatures, acidity and sea levels.

There are fears that the increase in sea levels in particular has passed a tipping point, and rather than slowing it is actually accelerating, contributing to the recent disasters in the Bahamas and Mozambique.

As well as the human and environmental toll, the growing frequency of natural disasters is heaping costs on the global insurance industry.

On Monday (23 Sep) the United Nations (UN) held a climate change summit in New York at which it proposed ending subsidies for all fossil fuels for power generation, accelerating the closure of existing coal-fired power stations and an end to building new plants.

This would clearly be negative for thermal coal-mining firms like Anglo American (AAL) and BHP (BHP), although UK electricity generators such as SSE (SSE) have already invested heavily in renewable energy and would be less affected.

Ironically, while China, India and the EU committed themselves to tougher carbon-reduction plans, the US – which under President Trump has rolled back over 80 climate change regulations – refused to take an active role.

In another example of the environment grabbing the agenda, a new UK ‘impact-focused’ stock exchange has been proposed.

Based in Scotland, the exchange hopes to be the first in the world to mandate the annual reporting by issuers of the social and environmental impact of their business.

The proposal has the backing of the UN, which described the exchange as ‘a game-changer for our planet’.

Companies and funds wanting to list will need to prove that they ‘generate a measurable, beneficial social or environmental impact alongside a financial return’, while their performance will be measured against the UN’s Sustainable Development Goals.

Potential candidates for inclusion may include Biffa (BIFF), Impax Environmental Markets (IEM), John Laing Environmental Assets (JLEN), Gresham House Energy Storage Fund (GRID) and Pennon Group (PNN).

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