By Susan Barreto, Editor of Alternatives Watch
As young climate activist Greta Thunberg arrived at the global climate change summit in Madrid with fanfare this week, Boston-based investment consultant Cambridge Associates issued its own report for investors interested in the science behind climate change and curious why it matters for their investment portfolios.
The consultants said that climate risk is likely underestimated by financial markets and there is still a window of opportunity for investors to get ahead of the curve as Cambridge expects repricing of risk to take place on an unprecedented scale. “Put simply, we all need to think like scientists now,” they wrote.
With charts and tables illustrating the challenge, Cambridge stressed that the 20 warmest years on record have occurred in the past 22 years, with the past four years as the hottest and this year is on course to likely surpass the others.
The rising temperatures are buoyed by global carbon emissions that are also rising and for its part Cambridge said this has impacts asset allocation decisions that may be impacted by asset price shocks. They added that while there are also opportunities to invest in the transition to a low-carbon economy, the unintended impact of climate change is likely skewed to the downside.
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