Climate Change – Implications for Finance & Investment
Chair: Andrew Voysey, Director, Finance Sector, CISL
Guest: Dr Farzad Saidi, Assistant Professor, Cambridge Judge Business School
Guest: Clarisse Simonek, Programme Manager, Investment Leaders Group, CISL
- What are the main research findings presented in the report “Unhedgeable Risks: how climate change sentiment impacts investment”?
- What impact will evidence of short term financial risks relating to climate change have on the sector?
- What is the extent to which “portfolio decarbonisation” is impacting on the finance and investment sector?
- What are the impact, roles and responsibilities of different financial actors (e.g. insurance, pension funds, asset managers) in responding to climate change?
- What innovations in investment products and solutions for climate change are emerging and what incentives would help these to scale?
- Short-term shifts in market sentiment induced by awareness of future climate risks could lead to losses of up to 45% in an equity investment portfolio value and 23% for a fixed income portfolio.
- Around half (53%) of this decline is “hedgeable” if investments are reallocated effectively, but 47% is “unhedgeable,” meaning investors and asset owners are exposed unless system-wide action is taken.
- Long-term analysis: Economic growth is highest in the long term if society is dealing successfully with climate change.
Do you think the finance sector should be more active on climate change?
What do you believe is the most effective way for the finance sector to mitigate the risk of climate change?
Are you optimistic that COP21 will contribute to a change in investors’ behaviour related to climate risk?