Climate Change: Implications for Investors and Financial Institutions

A new briefing published by the Institutional Investors Group on Climate Change (IIGCC), the United Nations Environment Programme Finance Initiative (UNEP FI), the Cambridge Institute for Sustainability Leadership (CISL) and the Cambridge Judge Business School (CJBS) distils the key findings from the recently released Intergovernmental Panel on Climate Change Fifth Assessment Report for investors and financial institutions.

The briefing concludes that:

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  • Climate change will affect all sectors of the economy, and is relevant to investors and financial institutions. However, not all macroeconomic changes and microeconomic conditions will apply equally to all investments.
    • There are risks and opportunities associated with policy measures directed at reducing greenhouse gas (GHG) emissions. To meet the internationally agreed target of keeping the global average temperature rise since pre-industrial times below 2°C, patterns of investment will need to change considerably.
  • Physical impacts of climate change will affect assets and investments. Climate change and extreme weather events will affect agriculture and food supply, infrastructure, precipitation and the water supply in ways that are only partially understood.
  • Decisions made by private sector investors and financial institutions will have a major influence on how society responds to climate change.
  • There will be significant demand for capital, with governments looking to the private sector to provide much of it. To keep the global temperature increase below 2°C, additional investment required in the energy supply sector alone is estimated to be between USD 190 and 900 billion per year through to 20501, accompanied by a significant shift away from fossil fuels towards low-carbon sources such as renewables and nuclear.

Investors_CoverThe investors summary is one of a series of thirteen, based upon The Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC).

AR5 represents the most comprehensive overview of climate science to date and is the fact base that will utilised by governments and businesses to formulate climate policy in the coming years. The set of summaries cover the broad implications of climate change, how the IPCCC works and give an overview of the physical science, as well as adaptation and mitigation options. The summaries, in addition to investors and financial institutions, cover the tourism sector, the transport sector, the agriculture industry, defence, the energy sector, fisheries and aquaculture, the building sector, primary industries, cities and employment.

This publication has been developed and released by IIGCC, UNEP FI, CISL, CJBS and ECF.

For more information and to download the report, please visit the CISL webpage.