Global Investment themes tend to be driven by the largest investors in the world - the United States university endowments and the largest pension schemes, with the objective of maximising returns and managing risk.

For most investors outside of this trillion-dollar investment world, it is difficult to understand the benefits of incorporating environmental, social and corporate governance (ESG) risks into a portfolio.

The global investment world believes there is added long-term value in the ESG concept, which has just had a huge helping hand from Footsie who has developed a new data service to measure and risk rate the ESG exposure of 2,300 companies around the world.

The ratings cover six ESG themes, environmental management, climate change , human and labour rights, supply chain labour standards, corporate governance and countering bribery.

For most private investors the cost of this service will be out of their budget but it is important to take note of this fast changing world and to try and understand what it is all about.

It's important to understand the risk and also the potential added value attached to climate change. The first thing to accept if you are a non-believer is that the world's governments have collectively agreed to reduce the world’s carbon emissions and that means the developed world has to move towards a low carbon economy. This means  our lives will be changed by government policy, and with that there will be risks and opportunities.

Recycling domestic waste is now mandatory and it is a part of our lives to recycle our own domestic waste and put out different bins for collection. We used to go to the supermarket for our weekly shopping and come back with dozens of plastic bags.  We are now seeing a vast number of shoppers using their own reusable bags. Our habits have changed due to government legislation again, beyond our control.

One way the European Commission and the UK plan to force companies to change their habits is through penalties and tax to reduce carbon emissions. The impact will be dramatic. In the Budget speech, George Osborne announced the second corporate tax to be introduced on companies’ emissions in six months. The companies affected saw their shares fall.

How can private investor's savings be hedged against the risk? There are funds out there that can reduce the carbon footprint of a portfolio’s investment. The world is changing, a new look at investment solutions is required for the future.

By Ralph Pettengell, chief executive of Carbon Footprint Investments