From hurricanes and wildfires in the U.S. to heat waves in Europe and floods in Japan, a new report by the BlackRock Investment Institute suggests impact investors rethink their assessment of asset vulnerabilities by incorporating risks related to more frequent and extreme weather events.
“We find that the risk posed by more frequent and severe weather events (…) are not fully reflected in the price of many assets,” said Brian Deese, Global Head of Sustainable Investing, BlackRock (NYSE:BLK), the world’s largest asset manager.
“The research demonstrates that if (…) you are not asking questions about how climate-related risks are affecting your investments, you are missing risks that are in the market today,” Mr Deese told the Financial Times.
Indeed, many investors recognize that climate-related risks are growing, a press release states.
However, until recently, most investors did not have access to data showing the potential impact at the asset level of both direct physical risks and indirect economic impacts as well.
The study, which has been defined “a thunderbolt for investors”, leveraged 160 terabytes of data to assess climate-related risks facing specific asset classes, both today and under a range of future climate scenarios reaching out to 2100.
Media point out the analysis comes following major climate risk warnings like the ones from the World Economic Forum, which named extreme weather one of the most pressing threats facing the global economy in 2019, and the UN, that warned about the risks related to the food security.
Download the full report here.
Oliver* 