Report warns investors to consider financial impact of climate change

Climate change and extreme weather conditions pose huge risks to investors, so mitigation strategies are necessary to avoid future losses, according to a report by a network of institutional investors.

The Investor Group on Climate Change (IGCC), based in Australia and New Zealand, presented three reports about climate risks for investors and possible alternatives last week at the Conference of Major Superannuation Funds in Brisbane.

The study, which was researched by the Australian National University (ANU), addresses the minerals, property, construction and oil and gas sectors, which it says are among the most threatened by possible climate change consequences.

“By assessing emissions exposures and expected climate risks, investors can judge how companies will be placed to compete in a low-carbon world and a high climate risk world”, Nathan Fabian, chief executive of the IGCC said.

“Investors can use the ANU research to reset their thinking about impacts on future company earnings and to engage more deeply with companies on their responses to climate change.”

IGCC is expecting more extreme weather events due to global warming, after Australia experienced record high temperatures in January. It suggests that as cyclones and heatwaves increase, investors could face huge losses.

However, it adds that several mitigating measures can be taken to address climate change and improve energy efficiency.

Fabian said, “Many companies have been considering climate risks for some time. Investors should reconsider how current and impending climate change impacts will influence company prospects, and build that into their valuations.”

The IGCC report is the latest in a long list of appeals by investor groups calling for a more decisive strategy to tackle climate-related issues. In November last year, Blue & Green Tomorrow reported on how many high-profile investors had clubbed together to urge governments to adopt serious climate measures.

Further reading:

Report finds institutional investors can contribute significantly to renewables

Investors urge governments to act upon dangerous methane levels

Investor report highlights gap between climate change and action

Biggest global investors call for urgent action on climate change

Investors demand government action to avoid dangerous climate change impacts