An Investor Guide to Physical Climate Risk & Resilience: An Introduction

This Investor Guide aims to provide private investors, financers and other stakeholders with a simple, plain language introduction to the topic of physical climate risk and resilience. It does so by providing:

  • A description of physical climate risk and resilience
  • An explanation of why it matters to investors
  • Suggestions about what an investor can do about it; and
  • Suggestions for further reading.

This Investor Guide outlines three main avenues through which investors can identify and manage the physical effects of climate change on investment portfolios, and seize climate-resilience investment opportunities, namely:

  • Investigate whether, how and when the physical impacts of climate change might affect your assets’ performances or valuation
  • Require asset managers and investment advisors to consider climate risk in their investment and corporate engagement strategies
  • Allocate capital to climate-resilient investment and towards building resilience to de-risk portfolios.

As evidence of climate change’s impact on all asset classes mounts, investors should consider starting to understand, assess, and mitigate their climate risk exposure. In addition, investors can look forward to additional guidance on methodologies, metrics and emerging best practices to manage physical climate risk that are forthcoming in 2018.

GARI itself will focus on deeper analysis of physical climate risk and resilience in 2018, including a likely focus on specific sectors, companies, and cities, as well as risk metrics, and investment opportunities.