Florida analyzes climate change risk factors in investment portfolio

Sep 10, 2008

Tampa Bay Business Journal–September 10, 2008

Tampa Bay Business Journal

The Florida treasury will begin formal analysis of its investments for the financial impacts of climate change.

The state treasury is the first in the nation to undergo such an analysis, according to a release from Alex Sink, the state’s chief financial officer.

Sink, who oversees the treasury and department of financial services, has launched a semi-annual review process to assess how public fund managers incorporate climate risk in portfolio holdings as part of prudent investment management, the release said.

Sink partnered with RiskMetrics Group Inc. (NYSE: RMG) to analyze the corporate bond holdings of 20 external fund managers and one internal fund manager. Corporate bonds represent approximately $3.4 billion of Florida’s $24 billion in Treasury funds.

Financial returns will remain the primary consideration in evaluating fund manager performance, but climate risk is being added as an integral component of prudent portfolio management, the release said. Treasury fund managers will be asked about their methods and capabilities to analyze climate risk, with an expectation that they will be able to demonstrate improvement in scores over time, the release said.