The climate conundrum

What strategies are available for investors to tackle the increasingly important theme of climate risk?


Belinda Gan

Belinda Gan

Associate Product Manager, Global Sustainability

Climate risk is rising up the agendas of asset owners faced with both the growing prospect that more stringent climate regulation will impact portfolio returns and increasing scrutiny from beneficiaries and other stakeholders.

The global agreement to limit temperature rises to two degrees over pre-industrial levels, reached in Paris last year, will require much more stringent policies and legislation than we have seen to date. On the other hand, while climate risk has become an issue asset owners can no longer ignore, understanding and analysis of how it is best measured and managed remains nascent. This short paper lays out our perspective of the main strategies available to investors.