Climate Change could Contribute 10% to Portfolio Risk
11th March 2011 by Madlen King
Climate Change could Contribute 10% to Portfolio Risk A report recently published by Mercer, the consulting and investment services company, and partnered by the International Finance Corporation (IFC) and the Carbon Trust presents the results of a study of 14 institutional investors to measure the risk that climate change presents to investment portfolios. The full report available here concludes that: • Climate policy could contribute as much as 10% to overall portfolio risk; • The estimated cost of climate policy for the market is $8 trillion by 2030; • To manage climate change risks institutional investors need to consider diversification across different sources of risk; and • A typical portfolio could manage the risk of climate change by ensuring that 40% of its assets are held in assets that are ‘climate sensitive’. And presents a series of steps that investors can take to mange their climate change risks, including climate risk assessment and Increased allocation to ‘climate sensitive’ assets.
Madlen King is the Global Head of Climate Change & Sustainability. She ensures the technical integrity of LRQA climate change and sustainability services and liaises with external bodies and governments on climate change. Within this role, Madlen is responsible for the service design, delivery and maintenance of accreditations for all GHG validation and verification schemes [...]