We provide our view of climate change and its likely impact on the investment landscape over the next decade as well as how we consider and evaluate climate issues within our investment process.
Climate change will be a defining investment topic for the decade ahead, creating risks and opportunities for all businesses. As long-term investors seeking to allocate capital responsibly, MFS is carefully analyzing the impact that climate change has on all companies held in our clients’ portfolios, as well as on those companies being considered for future investment.
Climate change and regulations associated with climate change are materially impacting many businesses’ revenue growth, margins and returns, cash flows, capital expenditures and valuation. These impacts are arising due to regional and country commitments (e.g., carbon prices and taxes), changing consumer expectations and preferences for lower-impact products and services, physical disruptions caused by a warming climate and increased divestment/investment based on certain companies’ preparedness for climate change. As long-term investors seeking to understand the duration and stability of financial returns, we assess and manage this important issue at both the issuer (company, sovereign or sub-sovereign) level and portfolio level. MFS also regularly engages with companies to encourage better disclosure and management of climate risks.
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