While investors are aware of the need to integrate physical climate risks in financial decision-making, approaches to addressing it remain nascent, fragmented and unfamiliar.
The systemic nature of physical climate risk therefore requires systemic risk management and a two-fold approach from private capital: (1) making investment portfolios resilient to these risks, and (2) also actively investing in resilience measures to strengthen the broader ecosystem.
This guide is designed to serve as a roadmap for investors, and is structured in two main sections:
- In focus: the investment process: illustrates how decisions made early on can significantly impact subsequent stages and opportunities, emphasizing the need to address physical climate risks from the outset.
- Changing the landscape: engaging with the enabling environment: examines the different ways in which investors can proactively engage with policy, the real economy, the broader financial sector and within their own organisations to enhance systemic resilience.