The Institutional Investors Group on Climate Change (IIGCC) has today published new guidance to help investors integrate the risks and opportunities presented by climate change into their decision-making.
Developed with specialist consultants Acclimatise and Chronos Sustainability, the guidance offers practical steps to identify, assess and manage climate-related physical risks across investors' portfolios.
The IIGCC said that investors have not paid enough attention to the management of climate risks, and that with more than 230 members representing over €30trn (£27trn) in assets, it hopes to rectify the issue.
This comes after research from Cambridge University found that an additional $100bn of global costs linked to extreme weather events – such as floods, heatwaves and droughts – can be expected through to 2040 alone.
“Investors have no time to lose in understanding and acting on exposure to the physical risks of climate change,” said IIGCC CEO Stephanie Pfeifer. “The impacts of the climate crisis are already being felt and set to become far more severe,
“A focus on resilience can help protect portfolios and strengthen returns while enabling communities and the economy as a whole to better adapt to climate change.”
The guidance also allows investors to draw on additional available tools and data sources in identifying and assessing specific risks, and opportunities across different asset classes.
Managing these risks has taken on even greater importance in recent months amid fears that governments could turn to fossil fuels to stimulate their economies once the coronavirus crisis has passed.
The Investor Agenda group recently wrote to all G20 governments warning that recovery plans that exacerbate climate change would expose economies to further financial, health and social risks.
“Institutional investors take a long-term view of value and returns, and are therefore well-placed to assist governments devise multi-year recovery efforts,” the group wrote.
“The path we choose in the coming months will have significant ramifications for our global economy and generations to come.”
Author: Chris Seekings
Image credit: iStock