How do we create a climate resilience investment framework to address physical climate risks?
Managing the impact of physical climate risks is becoming an important part of an investor’s fiduciary duties, to protect their clients’ and beneficiaries’ assets and the world in which they are valued. As temperatures rise, there is clear evidence that climate hazards affect portfolios and the assets within them. This could be through distribution to operations, supply- or value-chains, or indirectly through shocks to broader economic, human, or natural systems.
This discussion paper acts as a call for input and feedback from the investment community, climate resilience experts, and the wider group of stakeholders that have already pushed the resilience agenda within the financial industry; such as insurers, banks, and regulators.
Given the latest climate science and our knowledge of transmission of physical risks to financial risks, investors will need to pursue climate resilience. An understanding of the adaptive capacity of assets within a portfolio will be imperative, as well as an increasing consideration for addressing risk to the systems in which they operate.
