(Pensions & Investments) Investors are stepping up efforts to understand and better manage the impact of climate change on their physical investments in real assets, including private equity, from farmlands to urban office buildings. It is an increasingly urgent mission as the transition to a net-zero economy ramps up.
“Physical climate-risk scenario analysis is particularly important for real asset investors as portfolios are more likely to be materially affected by increased risk of physical impacts and damage as a result of flooding, coastal inundation, sea level risk and extreme heat,” said Shuen Chan, head of ESG for LGIM Real Assets in London. Her firm’s analysis of extreme physical climate risk has stepped up in the last 18 months, including more forward-looking scenario analysis of that risk, with the idea “to build more resilient portfolios,” she said.
In the U.S., the $267.8 billion New York State Common Retirement Fund, Albany, and Impax Asset Management Group PLC have joined forces to ask S&P 500 companies to identify the location of key facilities and buildings where climate change events could negatively affect operations and in turn, financial results.
Read more here.