IPCC_AR5__Implications_for_Investors__Briefing__WEB_EN

Key Findings from the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report (AR5)For more information please visit cisl.cam.ac.uk/ipccImpactsIntegrationand ResponseUncertaintyInfluenceResponding to Climate ChangeInvestors and financial institutions will continue tobe exposed to downside risks as a result of climatechange. Investment consequences may includedramatic reductions in the value of particular assetsand, for banks, reductions in the creditworthinessand solvency of clients. However, they may alsoinclude new openings and opportunities.UncertaintyInfluenceThe specific investment made and thefinancing mobilised will depend ongovernment policyInvestors’ and financial institutions’ decisionsare a critical influence on society’s response toclimate changePolicy SignalsThe amount ofcapital required andallocated foremissions reductionand in addressingthe physical impactsof climate changewill depend on thespecific policymeasures adopted.MacroeconomicImpactsThere are significantchallenges inestimating the globaleconomic impactsfrom climate change– both in terms of thecosts associated withthe physical impactsand in terms of thecost of GHGemissions mitigation.Trade-offsDecouplingeconomic growthfrom GHG emissionswill have profoundimplications forcapital allocationdecisions andrisk-adjusted returns.ExpectationsGovernments arelikely to look to theprivate sector toprovide much of thecapital required todeliver significantreductions in GHGemissions and torespond to physicalimpacts of climatechange.DependenciesDecisions made byprivate sectorinvestors andfinancial institutionswill have a majorinfluence on howsociety responds toclimate change.InvestmentsThe willingness ofprivate investors andfinancial institutionsto provide this capitalwill depend on therisk exposure ofpotential investments,including policy risk,and on the incentivesthat are provided.