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World Bank Group | Pension Systems + Climate Risk : Measurement + Mitigation

Pension funds can potentially play a critical role in combating climate change by providing much needed fi nancing and investment. Intervention is necessary to bridge the fi nancing gap of between $1.6 trillion to $3.8 trillion in mitigation costs and $180 billion in adaptation costs to limit global temperature rise and ecosystem collapse.1 Institutional investors such as pension funds have two motivations to providing such fi nancing. On one hand, if the investor community does not act, they face a potential portfolio value loss of $10.7 trillion triggered by the materialization of transition, physical and regulatory risks. On the other hand, the transition to a 2°C scenario is expected to yield $2.1 trillion in global “green” investment opportunities for investors.

Pension funds can potentially play a critical role in combating climate change by providing much needed fi nancing and investment. Intervention is necessary to bridge the fi nancing gap of between $1.6 trillion to $3.8 trillion in mitigation costs and $180 billion in adaptation costs to limit global temperature rise and ecosystem collapse.1 Institutional investors such as pension funds have two motivations to providing such fi nancing. On one hand, if the investor community does not act, they face a potential portfolio value loss of $10.7 trillion triggered by the materialization of transition, physical and regulatory risks. On the other hand, the transition to a 2°C scenario is expected to yield $2.1 trillion in global “green” investment opportunities for investors.

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