New guidance for global investors to assess climate change impacts

It enables them to evaluate how their investment portfolios would respond to different levels of global warming

The UN and global investors have joined forces to launch guidance on how climate change and action could impact their portfolios.

A project led by the UN Environment Finance Initiative brought together 20 of the world’s largest investors to apply the approaches to measuring climate impacts and enable them to be more transparent about their climate-related risks and opportunities.

The guide enables investors to assess how their investment portfolios would respond to different levels of global warming and also details the methodologies piloted by the 21 investors.

UN Environment warns extreme weather events, including floods, tropical cyclones and extreme hot and cold days, are already physically impacting business operations globally.

It adds policy and technology shifts, at the same time, ensuring the world makes the transition to a low carbon economy mean emission-intensive companies will become less competitive.

These changes pose potentially unprecedented risks – and opportunities – to institutional investors and other financial institutions that are exposed to these businesses.

The results of its preliminary analysis showed government inaction on climate change will further exacerbate costs and risks, to the tune of $1.2 trillion (£0.94tn) for 30,000 of the largest listed companies – which means the higher the costs for companies, the lower the returns for investors.

Satya Tripathi, UN Assistant Secretary-General and Secretary of the UN Environment Group said: “We now know for sure that climate change will alter our living environment radically for the worse. If we are serious about the future of our civilisation and about delivering the Paris Agreement, we will have to fully decarbonise the economy by 2050, requiring no less than a ‘green industrial revolution’.

“It is still possible for us to act decisively to prevent catastrophic damage to the very web of life that sustains all species on the planet, including us humans.”

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