Investors and financial institutions are, and will continue to be, exposed to risks associated with climate change, according to a new report. However, the study notes that alternative opportunities in more sustainable sectors, such as renewable energy and energy efficiency, are available.
The publication of the report – Climate Change: Implications for Investors and Financial Institutions – coincides with a meeting of the industry, investors and public authorities at the 2014 Banking Environment Initiative Forum in Asia.
The report, published by a coalition of financial groups, argues that a range of climate impacts and related policy, such as extreme weather events and greenhouse gas emission reduction targets, could have a negative impact on investment.
For instance between the 1950s and 1990s, annual economic losses from large extreme events, such as floods and droughts increased 10-fold, demonstrating the increasing impact such extremes are likely to have. Between 1990 and 1996 alone, there were 22 floods with losses exceeding $1 billion (£590m) each. In 2010, 270 million people and $13 trillion worth of assets were exposed to a one-in-100 extreme sea-level event.
The report states, “The investment consequences may include dramatic reductions in the value of particular assets, such as conventional coal-fired power stations that are no longer permitted to operate because of constraints on their greenhouse gas emissions.
“There will be indirect knock-on effects of climate change, such as the threat to social stability posed by high and volatile food prices resulting from changes in agricultural patterns.”
The report also noted that some assets have the potential to become stranded – a phenomenon MPs in the UK recently warned investors about – because they are being supplanted by greener alternatives or technological innovations, or due to regulations or resource constraints.
Despite the risks, opportunities to receive stable returns still exist, particularly within the sustainable energy sector. Governments have set targets to cut emissions and will be looking to the private sector to provide much of the capital needed, as a result, incentives are being used to attract investment.
Karin Ireton, chair on the UN Environment Programme Finance Initiative’s (Unep FI) climate change advisory group and director of group sustainability management at Standard Bank, commented, “The scale of climate change as an environmental, economic, social and financial problem is not only indisputable now; it is unprecedented.
“The key challenge for the financial sector in coming years will be to devise and implement strategies that weather the stresses and risks of a changing climate as well as seize the opportunities of low-carbon and climate-resilient development.”
The study also adds that investment decisions made by investors and financial institutions will be “critical to determining how society responds to climate change”. This is because capital allocation will have a major influence on infrastructure projects for the decades to come.
Photo: lamoix via Flickr
Like our Facebook Page
How to Find an Eco-Friendly Termite Control Service Provider in Malaysia
Eco-Friendly Vegans Win Most Battles Not the War
3 Iconic Chicago Billboards Eco-Friendly Advertisers Can Learn from
EnviroSolar’s Abe Issa Discusses Success in Green Entrepreneurship
How Sports Could Be Impacted by Climate Change
What Eco-Friendly Patients Should Know about Online Therapy
6 Reasons Why Meal Delivery Services are Eco-Friendly
The Path for Retail’s Sustainable Future
4 Eco-Friendly Ways to Treat a Sinus Infection
4 Strategies for Eco-Friendly Real Estate Investors to Find Properties
How Managed Print Services Helps to Reduce Paper Waste
Why Scientists Are Concerned About ‘Forever Chemicals’ In Drinking Water
Meat Farming Is Only Getting Smarter, Easier & Eco-Friendlier
What is Eco-Friendly Homesteading and How Does it Affect Your Insurance?
Importance of Using a Water Purifier in an Area with High Pollution
Alternative Financing Ideas for Green Businesses that Shun Banks
Tencel Material Demand Shows Britain Is More Eco-Friendlier Than Ireland
How To Invest in Clean Energy Stocks in Only Five Easy Steps!
How To Secure Funding As An Eco-Entrepreneur?
4 Amazing Eco-Friendly Businesses Worth Starting in 2021
- Features8 months ago
Seven Health and Safety Tips for Eco-Friendly Products in a Green Home
- Energy9 months ago
Eco-Friendly Homeowners Lower Carbon Footprints through Greater Air Conditioner Efficiency
- Features8 months ago
Essential Guidelines for Eco-friendly Moving into new Home
- Invest10 months ago
The Eco-Friendly Evolution of Bitcoin Over the Years