Presentation on theme: "Mercer’s Climate Change Research 2011 to 2015"— Presentation transcript:
0 INVESTING IN A TIME OF CLIMATE CHANGE May 14, 2015Karen Lockridge Principal, Toronto@KarenLockridge
1 Mercer’s Climate Change Research 2011 to 2015 Original study published in Update to be published on June 4th 2015Why update?Main reason – it has been four years; new IPCC AR5 released in interim; understanding of climate change increased dramaticallyModel improvement – after reviewing the prior analysis with partners new opportunities for improvement of modeling approach revealed
2 Mercer’s Modeling Process Getting to the point PORTFOLIO IMPLEMENTATIONINVESTMENT IMPLICATIONS‘TRIP’ RISK FACTORSADDITIONAL LITERATURE1SCENARIOSTRANSFORMATIONCOORDINATIONFRAGMENTATION (LOWER DAMAGES)FRAGMENTATION (HIGHER DAMAGES)423EMISSIONS PATHWAYSECONOMIC DAMAGESCLIMATE MODELS / MODELLING INTEGRATED ASSESSMENT MODELS (IAMs) ESTIMATING THE COST OF MITIGATION, ADAPTATION AND PHYSICAL DAMAGES
3 Results Summary Climate change impacts returns regardless of scenario Meaningful return impacts (both positive and negative) at the sector and asset class levelPrioritize action over inactionWe’ve identified the “what”, the “so what” and the “now what” for each key findingThe potential negative return impacts will only eventuate for those investors that remain unprepared for change.
4 The Investor Challenge The times they are a changing CLIMATE-AWARE FUTURE MAKERSWill build upon the Climate-Aware Future Taker position and make a concerted effort to influence systemic, market-wide outcomesCLIMATE-AWARE FUTURE TAKERSWill consider climate risks across portfolios, taking action across and within asset classes and industry sectorsCLIMATE-UNAWARE FUTURE TAKERSWill ignore the risks and opportunities associated with different climate scenarios, to the potential detriment of long-term returnsThe Critical Question for Fiduciaries is: Which category describes you?