Stakeholder Trends and Insights

Report:
Over 70% of Investors See Risk, Investment Opportunities in Climate Change Impact

This week at COP22, the Global Adaptation & Resilience Investment Working Group (GARI) released its discussion paper, “Bridging the Adaptation Gap,” reporting that 70 percent of private investors surveyed see both risk and investment opportunity from the impact of climate change. According to GARI, 78 percent of 101 surveyed investors and other stakeholders thought evaluating the physical risk from climate change was “very important,” while 70 percent would consider making investments that supported adaptation to climate change or climate change resilience now.

By Talia Rudee | Published 8 years ago | About a 2 minute read

This week at COP22, the Global Adaptation & Resilience Investment Working Group (GARI) released its discussion paper, “Bridging the Adaptation Gap,” reporting that 70 percent of private investors surveyed see both risk and investment opportunity from the impact of climate change. According to GARI, 78 percent of 101 surveyed investors and other stakeholders thought evaluating the physical risk from climate change was “very important,” while 70 percent would consider making investments that supported adaptation to climate change or climate change resilience now.

“Bridging the Adaptation Gap” describes the discussions of over 150 private investors and other stakeholders who met five times in 2016 to focus on (1) approaches to measurement of physical climate risk and (2) examples of investment in climate adaptation and resilience.

“GARI demonstrates that private investors see both the risk to their portfolios from the physical impact of climate change and the opportunity to invest in addressing that risk today,” said lead report author Jay Koh, founder and chair of GARI and Managing Director of The Lightsmith Group, an alternative investment firm. “Post-Paris, investors are calling for better ways to measure physical climate risk and for support in making resilient investments.”

The report reveals that respondents consider transparency and practicality the most important factors in approaches to assess physical climate risk. Over 60 percent of respondent investors are considering investments today in resilient infrastructure and in companies whose products address the impact of climate change on water, agriculture, healthcare, energy, and financial services.

Contributing author Emilie Mazzacurati, CEO of climate risk and resilience market research firm Four Twenty Seven, added, “In the context of worsening signals from climate science and the uncertainty on our ability to meet Paris targets, investing in climate resilience is all the more critical. The report demonstrates that private investors are ready to step up to bridge the adaptation finance gap.”

“Climate risk is often overlooked. Approaches to measurement of physical climate risk will be key to integrating the notion of climate risk across a range of investment products, and from an understanding of these risks, opportunities for new, more resilient investment will emerge,” says contributing author Stacy Swann, CEO of Climate Finance Advisors, a consulting firm advising investors and policy makers. “GARI is an initiative that brought together the constellation of financial actors who are the thinkers and the early adopters in this new investment space.”

The global investment community has been vocal of late about its desire for a drastic increase in ethical investment options - as well as an easy, standardized way to identify them; and fixing the disconnects that make it difficult for many companies to properly define, measure and communicate ESG performance and risks.