Global investment portfolios could lose up to 45% as a consequence of climate change sentiment.
A new report from the University of Cambridge stated investors can’t necessarily protect themselves from most of the unless action on climate change is taken.
It added around half of the potential loss could be avoided through portfolio reallocation.
It looked at the short term risks stemming from how investors react to climate information such as policy decisions, technology uptake, market confidence and weather events.
It also found that shifts in climate change sentiment could cause global economic growth to reduce in a five to 10-year period as a consequence of economic adjustment.
However, in the longer term the economic growth picks up most quickly along a low carbon pathway, with annual growth rates of 3.5% .
Jake Reynolds, Director of Sustainable Economy at the Cambridge Institute for Sustainability Leadership said: “This new research indicates that no investor is immune from the risks posed by climate change, even in the short run.
“What’s new about this study is its focus on the potential shortterm impacts which could surface at any time. Major events, such as the outcome of the upcoming United Nations climate talks in Paris in December, can send signals which drive market sentiment – sometimes slowly, sometimes rapidly – and this study allows us to model the implications.”