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Risk and resilience

The ILG has studied the economic and financial impacts of climate and nature related risks in order to identify opportunities for reducing investment risks through portfolio construction and diversification across different asset classes, regions and portfolios.

  

Key outputs


Nature related financial ri

Nature-related financial risks; a joint venture with CISL’s Banking Environment Initiative

The Investment Leaders Group and Banking Environment Initiative are working closely with their member financial institutions to:

  • Identify and assess the financial risks of nature loss.
  • Determine a common language and framework for risk identification, so that nature-related financial risks can begin to be measured and managed by industry leaders.

To achieve these two objectives CISL, financial institutions and academics are co-creating frameworks, methodologies and business briefings, as outlined below. By doing so, we are targeting a third objective: Enabling the wider financial community to understand, measure and manage the financial materiality and risk of nature loss.

Feeling the heat wide

Feeling the heat: An investors’ guide to measuring business risk from carbon and energy regulation

An assessment on carbon regulation risk addresses the impact of future carbon- and energy-related regulation on the most sensitive industries and geographies at a company level.

The ILG’s work on climate change sentiment risk takes a different approach and looks at the short-term risks stemming from how investors react to climate-related information, from policy decisions and technology uptake, to market confidence and weather events.

Unhedgeable Risk

Unhedgeable risk: How climate change sentiment impacts investment

How shifts in market sentiment induced by awareness of future climate risks could impact global financial markets in the short term.

This study sheds light on the vulnerability and resilience of different portfolio types to climate change-related risks. With this information, investors can start to understand how to hedge risk and invest in assets with lower potential of being affected by climate change risk.

 

 

 

 

 

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Members

Investment Leaders Group members. Cambridge Institute for Sustainability Leadership.

 *HSBC Bank (UK) Pension Scheme

Contact

Lucy Auden

Lucy Auden, Senior Programme Manager, Investment Leaders Group