INSIGHT by The Investor Group on Climate Change (IGCC)
The Investor Group on Climate Change, whose members manage more than $30 trillion globally, yesterday launched “Road to Resilience” a new strategy to stimulate investment in climate resilience, protecting against the physical risks of climate change.
| The Business Case For Progress
The latest science indicates that the physical impacts of climate change will cost the Australian and New Zealand economies hundreds of billions of dollars in the coming decades.
Despite this, Australian institutional investors have made much less progress on identifying and quantifying risks from climate damage and disruption than their progress managing the economic risks from decarbonising the economy, IGCC’s data shows.
Institutional investors are exposed to these physical risks directly and indirectly. More intense and frequent extreme weather events will damage assets and reduce productivity due to altered climate conditions. Indirect impacts may include disruptions to supply chains that interrupt business, more expensive or unavailable insurance and worse overall economic conditions.
On a more positive note, Australia and New Zealand are well-placed to provide international leadership on building resilience. The countries have sophisticated workforces across the financial system and climate science, and unique exposure to physical risks.
| Road to Resilience has four key objectives:
〉Integrating physical risk and resilience into existing climate-related activities.
Climate risks are often primarily viewed, in the financial sector, through the lens of decarbonisation.
〉Developing a shared understanding of physical climate risks among stakeholders.
Information about the likelihood and impact of damage and disruption is currently inadequate, and where it does exist, not widely understood.
〉Advocating for investable policy that proactively addresses physical climate risks.
Current policy signals and incentives have not stimulated sufficient private capital investment into resilience and adaptation.
〉Mobilising private capital into resilience and adaptation measures.
Significant resources will be required to adapt and build resilience, which cannot come from public sources alone.
Meeting these objectives will help investors protect their beneficiaries from physical climate risk and take advantage of opportunities to build resilience and adapt.
“This action plan that we’re launching today will be an accelerant. It will help investors get up to speed on the least-understood risk in the economy.
“Road to Resilience will also help investors influence all the other parts of the ecosystem that also need to play their part.
“Institutional investors cannot divest from climate risk.
“This strategy is designed for the real, system-wide adjustments that will make sure we’re not divesting, we’re investing in a climate resilient economy.”
-IGCC CEO Rebecca Mikula-Wright
Read the full guide
The Investor Group on Climate Change (IGCC) We are the leading network for Australian and New Zealand investors to understand and respond to the risks and opportunities of climate change. Our members have more than $30 trillion in global AUM, and $3 trillion in local AUM. They include our countries’ largest superannuation and retail funds, specialist investors and advisory groups, and their beneficiaries include more than 7.5 million Australians, and millions more New Zealanders.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.