IPCC_AR5__Implications_for_Investors__Briefing__WEB_EN

Climate change presentsreal risks and opportunities.ConclusionClimate change presents real risks andopportunities for investors and financialinstitutions across all asset classes andacross all time frames including the veryshort-term. Despite uncertainties in theprojected economic impacts and in theeffects on investment portfolios, it is clearthat investors and financial institutionscannot completely insulate themselvesfrom the impacts of climate change on theirinvestments. There is a need to analysethe risks and opportunities to investmentspresented by the physical impacts of climatechange and by policy measures directedat reducing GHG emissions. Investors andfinancial institutions will then be able torespond to these risks and opportunities.Climate change is likely to significantly alterpatterns of capital investment. As warmingincreases, transport, processing and retailingare all potentially affected as links in thesupply chain are exposed to climate risks,such as disruption of operations and the needfor more extensive temperature control.It is estimated that to keep the rise in globalaverage temperature since pre-industrialtimes below 2°C, an additional investmentof between USD 190 and 900 billion peryear through to 2050 would be required inthe energy supply sector alone. Significantamounts of capital will also be required inorder to respond to climate change.Governments are likely to look to theprivate sector to provide much of the capitalrequired to deliver significant reductionsin GHG emissions and to support efforts toaddress, or respond to, the physical impactsof climate change. While the societal casefor action is clear, the willingness of privateinvestors and financial institutions toprovide this capital will depend on how theyview the risks associated with policy and theincentives provided.IMPLICATIONS FOR INVESTORS AND FINANCIAL INSTITUTIONS P13