(Bloomberg) – The world's insurers, banks and pension funds are "inherently susceptible" to threats from climate change and must make adjustments, from shifting investment toward environmentally friendly industries to revamping strategies to reduce risk, said the Global Risk Institute.
"Climate change is a top priority that must be addressed systemically and without delay," concludes a report by the Toronto-based group that researches risks to the global financial services industry.
Strategies to reduce risk must be revamped
Climate change poses "a real and potentially devastating risk" to investment portfolios, including $35.4 trillion overseen by the world's pensions. Global investment portfolios may lose up to 45% due to short-term shifts in climate sentiment, the institute said, citing a 2015 University of Cambridge study. Half those losses could be avoided by reallocating portfolios, though half would be unhedgeable without system-wide action on climate change.
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