When investors refer to climate change risk, they often mean the risks related to the low-carbon transition (‘transition risks’), such as changing consumer habits and technology advancements – rather than the physical risks of climate change.
There is an abiding feeling among investors that the brunt of climate change remains a long way off; as opposed to, say, the stranding of assets of which there are numerous case studies.
Not so, warn experts. A 2019 RI analysis found that at least 88 US real estate investment trusts, worth $800bn, were exposed to the most destructive effects of rising sea levels. Yet despite the known risks, the financial sector at large has refused to modify its behaviour, in effect creating a ticking time bomb. As an example, lenders have continued to pump billions in mortgage dollars to coastal areas which will be fully submerged by 2050.
For Emilie Mazzacurati, the founder and CEO of climate data firm Four Twenty…