Read the full story from the Rocky Mountain Institute.
Although investor demand for environmental, social, and governance (ESG) funds has been both strong and resilient in recent years, the ESG sector is not without its shortcomings. Climate-conscious investors often struggle to evaluate the specific objectives and intended impacts of ESG-labeled funds, which can vary widely. Even after careful evaluation, investors could be allocating capital to funds that leave out a transition-critical sector, one that will require large amounts of investment to support economy-wide electrification: electric utilities. In order to build out the clean energy resources necessary to pivot away from fossil energy production, without compromising reliability or burdening ratepayers, the utility sector will need much more capital, not less.
With the right metrics and engagement support, climate-conscious investors can offer electricity providers both the funds and the accountability needed to cut carbon pollution sufficiently to limit global warming to 1.5C over pre-industrial levels. RMI is developing a new platform to help investors, whether ESG-focused or not, become a conduit for real utility transition at scale.