- Build awareness through education and a portfolio climate risk assessment.
- Improve and effectively communicate portfolio decisions by incorporating climate change within your governance system.
- Implement using the twin portfolio levers of investment and engagement to prioritise portfolio risk reduction and investment opportunities.
- How big a risk/return impact could climate change have on our portfolio?
- What are the key risks and opportunities?
- What plan of action can ensure portfolio resilience?
The study findings are presented in the ‘Investing in a Time of Climate Change’ report, which, together with our associated climate risk framework, considers four climate scenarios and four climate risk factors to estimate the climate impact on potential returns. Download a summary of the report below and ask yourself, as a long-term investor, are you aware of your climate change risk exposure?
Long-term investors: Are you aware of your climate change risk exposure? Read this 4-page guide to consider your answer.
Four Key Findings
The four key findings of our Investing in a Time of Climate Change report suggest that anticipating and preparing for the impact of climate change on investment returns should be an integral part of the investment process.
- Climate change will have an impact regardless of the scenario.
- Potential sector impacts are most meaningful - particularly over the next 10 years to 2025.
- Asset class impacts can also be material - and vary by climate scenario.
- A 2oC (Transformation) scenario need not harm total diversified portfolio returns out to 2050.
A couple of months after our report was launched in mid-2015, an article in The New Yorker magazine called it “the most comprehensive from an asset-allocation perspective” to date. As we intended, it’s a report that made a contribution to The 21st UN Climate Change ‘Conference of the Parties’ (COP21), which concluded with an historic agreement that US President Barack Obama said provided "the best chance we have to save the one planet we have". In the lead up to and during COP 21, our report was referenced by Prince Charles, Bank of England Governor Mark Carney and Lord Bourne (UK Parliamentary Under Secretary of State for Climate Change).
The report describes the:
- Key motivation for investor action.
- Risk factors.
- Asset Sensitivity.
- Portfolio implications and investor actions.