Dow Jones Sustainability Indices

Climate Risk Analysis for Financial Institutions

“…Sustainability indices represent an index of organizations considered to be socially responsible, environmentally friendly, and sustainable in the event of environmental risks. Investment firms that offer Sustainability Indices may market them as safer and resilient to climate change to potential investors who seek investment confidence relative to environmental risks (Schmiedeknecht 2013). Organizations who are able to reach Sustainability Indices may be considered a safer investment option compared to organizations that cannot achieve the same qualifications.…”

“…Global and national compliance regulations stemming from global climate change mitigation efforts call for renewable energy, environmentally friendly business practices, and sustainability initiatives. Organizations may not have a strategic initiative or outlook to align their business strategies with considerations for regulatory and environmental risks associated with climate change which can lead to lack of investment confidence and appeal (Zu 2013;Baumast 2013;Schmiedeknecht 2013). An example of this can be evidenced by organizational climate risk disclosures that are disseminated as public information for investors and stakeholders to review potential liabilities and assets of the respective business that can be impacted by environmental risk factors.…”

“…Integrated technologies utilizing GIS-based analysis and data management tools can be employed to conduct automated monitoring, auditing, and reporting on sustainability models and goals to achieve compliance. The identification of potential risks and issues impacting business interests early on can help the business maneuver its directional strategy to avoid costly regulatory failures or repetitional damage (Zu 2013;Schmiedeknecht 2013).…”

“…Traditional risk management and climate science techniques may be performed on business assets, interests, and liabilities to assess relative impacts to the organizational profit goals (Zu 2013;Baumast 2013). Sustainability and vulnerability assessments conducted in depth consider environmental risk factors such as floods, natural disasters, and climate change and how they may be detrimental to the business (Zu 2013;Baumast 2013;Schmiedeknecht 2013). They also consider adaptation strategies to achieve residency in the wake of such environmental risks for business continuity and prosperity which can be translated into long-term confidence for investors.…”

“…Sustainability Risk Management extends into the financial markets by allowing organizations that satisfy corporate sustainability assessments to be held in Sustainability Indices (Schmiedeknecht 2013). Sustainability indices represent an index of organizations considered to be socially responsible, environmentally friendly, and sustainable in the event of environmental risks.…”