Investors Will Take A Hit From Climate Change, Says Mercer Report
Forbes
6/16/15

Your investment portfolio could suffer in coming years, thanks to climate change — and it’s not going to take 50 years to happen. That’s the take-home message of a recent report from Mercer, based on a collaboration with 16 large international investment groups and extensive financial forecasts. To put it even more bluntly: ignoring the reality of climate change could hit many investors hard within the next 10 years.

To account for uncertainty in the specifics of climate change predictions, this financial forecast looked at several scenarios: a global average temperature rise of 2º C, 3º C, and 4º C between pre-industrial times and 2050, with the various impacts those would produce. The biggest investment impacts will be in the coal sub-sector, with as much as a 74 percent drop in average annual returns over the next 35 years. That drop will be biggest in the next decade.

As with anything, some investors will win and others will lose in these scenarios: investment in renewables (solar and wind energy, for instance) could see a significant rise. Other investments — timber, agriculture, and real estate — could go either way, depending on which specific climate change scenario plays out. The uncertainty in scientific models is not your friend, though: gambling the wrong way on climate could end up hurting investments.

The Mercer report emphasizes that responses from companies and governments can affect these outcomes....

...As a final take-home message from Mercer’s report: it’s past time for business investors to take the long view on climate change, and to take the science seriously. It’s also wise for companies and their investors to work together on serious efforts (rather than token ones) toward mitigating damage from a warming planet, if for nothing else than enlightened self-help....

http://www.forbes.com/sites/matthewfrancis/2015/06/16/investors-will-take-a-hit-from-climate-change-says-mercer/