Review of the Sustainability and Climate Change Initiatives Within the Line of Investment Portfolios
| Autor | Oscar Eduardo Reyes |
| Cargo | MSc in Finance and PhD Student in Systems engineering and computation |
| Páginas | 95-115 |
O DE O N N º 2 5
95
Review of the Sustainability
and Climate Change
Initiatives Within the Line
of Investment Portfolios
Revisión de las iniciativas de sostenibilidad y cambio
climático dentro de la línea de portafolios de inversión
Oscar Eduardo Reyes*
* MSc in Finance and PhD Student in Systems engineering and computation. Research
Professor, Observatorio de Economía y Operaciones Numéricas (ODEON), Universidad Exter-
nado de Colombia, Bogotá (Colombia). [oscar.reyes@uexternado.edu.co]. [ORCID I D: 0000-
0002-1742-8121]
Artículo recibido: 24 de junio de 2023
Aceptado: 5 de octubre de 2023
Para citar este artículo:
Reyes, O. (2023). Review and analysis of the regulation and initiatives on the application of
sustainability and climate change criteria within the line of investment portfolios. Odeon,
25, 95-115.
DOI: ht t ps ://doi.o rg /1 0.18 601/17941113 .n 25 .0 5
96
ODEON, ISSN: 1794-1113, E-ISSN: 2346-2140, N° 25, julio-diciembre de 2023, pp. 95-115
Abstract
The intensity and frequency of climate disasters have been increasing dra-
matically over the past decade with a trend that also appears to continue. The
costs associated with these events are also becoming increasingly higher.
Furthermore, these types of climate disasters are assumed to be closely related
to the climate change we are facing. Under this scenario, the financial sec-
tor plays a key role in the way we manage the actions against climate change.
Thus, the higher the impacts of climate change, the faster the actions must
be implemented. However, there is a lag between the priority of the need for
actions and the actions we are implementing. Some standard risk approaches
have been implemented, but there is still a remarkable difficulty in understand-
ing and modeling the uncertainty of future impacts of climate change. In this
context, other kind of efforts are necessary from a multidisciplinary perspec-
tive that aims to complement the actions against climate change in the fields of
finance and investments. We provide a brief of the main existing initiatives but
highlight how, although there are important and significant efforts at corporate
level, the resulting initiatives are aspirational and voluntary, and thereupon,
insufficient regarding the mentioned need. In this sense, the article seeks to
pave the pathway towards the justification of the construction of investment
portfolios with principles of environmental sustainability.
Key words: Portfolio; sustainability; financial stability; ESG; climate change;
climate risk.
JEL Classification: G11, G18, G28, G32.
Resumen
La intensidad y frecuencia de los desastres climáticos vienen aumentado drásti-
camente durante la última década, con una tendencia que parece va a continuar
en ascenso. Los costos asociados a estos eventos también se incrementan cada
vez más. Además, se asume que este tipo de desastres climáticos están estre-
chamente relacionados con el cambio climático al que nos enfrentamos como
humanidad. En este escenario, el sector financiero juega un papel clave en la
forma en que gestiona las acciones contra el cambio climático; por lo tanto,
cuanto más fuertes sean sus impactos, más rápido deben implementarse estas
acciones. Sin embargo, existe un rezago entre la prioridad de la necesidad de
acciones y las acciones que realmente se están implementando. Se han pre-
sentado algunos estándares de riesgo, pero aún existe una notable dificultad
en comprender y modelar la incertidumbre de los impactos futuros del cambio
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