IPCC_AR5__Implications_for_Investors__Briefing__WEB_EN

Climate Change - Everyone's Business Implications for Investors and Financial InstitutionsClimate Change: Investors and Financial InstitutionsImpacts of climate change can have significant effects on investmentsby introducing previously unforeseen risks. Policies to restrain climatechange can also affect investments. However, opportunities are likelyto open up in fields such as renewable energy and energy efficiency.ImpactsPhysical risks and policy measures couldhave major impacts on investors and financialinstitutionsIntegrationEffective responses to climate change willrequire major capital investment and financeCLOSEDExtremeWeather EventsBetween the 1950sand 1990s, theannual economiclosses from largeextreme events,such as floods anddroughts, increasedten-fold. In the period1990 to 1996 alone,there were 22 floodswith losses exceedingUSD 1 billion each.Stranded AssetsAssets becomestranded for anumber of differentreasons: they canbe supplanted bygreener alternativesor technologicalinnovations, or insectors experiencingchange due to newregulations orresource constraints.Food SecurityClimate impactson agriculture areexpected to lead tohigher prices andincreased volatility inagricultural markets.Higher and morevolatile prices mayaffect socio-politicalstability.Scale of theChallengeTo keep the globaltemperature increasebelow 2°C, additionalinvestment requiredin the energy supplysector alone isestimated to bebetween USD 190and 900 billion peryear through to 2050.New Sourcesof Capital?USD 340 billionwas invested inreducing global GHGemissions in 2011/12,with some 62% ofthis amount providedby the private sector.Changing Patternsof InvestmentThe energy supplysector is likely tosee a significant shiftaway from fossilfuels towards nuclearand low-carbonsources such asrenewables. In 2012,renewables made upmore than half ofworldwideinvestment in theelectricity sector.