Climate change is a serious risk for investors.
That’s according to a new report by the International Finance Corporation (IFC) – a member of the World Bank Group.
However, the paper states if climate risks were incorporated in investment strategies it could help with return outcomes.
This is due to a better awareness of exposure to climate-sensitive sectors and asset classes.
The study, ‘Investing in a time of climate change’, looks at the impact on investment returns and how to improve the resilience of investment.
Christian Grossman, IFC Director for Climate Change said the report also sends a clear message to policymakers: “Resolving the uncertainty around the policy direction of carbon pricing will be an important first step toward transitioning to a low carbon economy.”
The study warns investors not to expect the future to mirror the past, particularly at a time when economic growth is heavily reliant on an energy sector powered by fossil fuels.