The Near-term Impacts of Climate Change on Investors
On May 2, 2017, Lamont-Doherty Earth Observatory and the Tamer Center for Social Enterprise at Columbia Business School will co-host an invite-only conference on “The Near-term Impacts of Climate Change on Investors” in midtown Manhattan
Peter de Menocal, director of Lamont-Doherty’s Center for Climate and Life and a co-organizer of the event, said the purpose of the conference is to increase dialogue between climate science and the business and finance communities.
The event will bring together climate scientists, who will present their most current, impactful work on sea level rise, climate sensitivity, extreme weather, and food and water security, with business and investment leaders, who will discuss how these changes impact the near-term, sector-specific risk portfolios of their assets and investments.
“Scientific advances can constrain specific risks over specific timelines,” de Menocal said. “The private sector and investment communities can turn this knowledge to action as they mitigate risk and seize opportunity. Climate is changing so rapidly and impacting so many sectors, yet the impacts have not been priced into many markets.”
Climate change directly affects financial markets through its impacts on life’s essentials: the security of food, water, shelter, and energy resources, as well as workforce, infrastructure, and supply chain vulnerabilities. Advancing research on how, when, and why climate impacts these resources provides new, actionable data for business and investment decisions over near- and long-term investment horizons.
“Climate science provides investors with insights that reduce risk in climate sensitive industries, and discovers opportunities to generate above-market returns in growth sectors,” said Bruce Usher, who serves as co-director of the Tamer Center alongside Damon Phillips; both helped organize the event.
Conference attendees and presenters include leaders in the business, finance, private equity, sovereign wealth, and family office communities, as well as representatives from national and local governments, academia, and non-profit organizations. A series of presentations, lightning talks, and panel discussions will explore the intersections of climate and finance, and promote dialogue about how a science-based approach can inform and guide business decisions.
One of the lightning talks pairs Adam Sobel, an atmospheric scientist at Lamont-Doherty and director of the Columbia University Initiative on Extreme Weather and Climate, with Stephen Weinstein, Senior Vice President of the reinsurance firm RenaissanceRe. Sobel and Weinstein will provide perspectives on extreme weather and climate events, and how strategic investment can help manage the property and casualty risks posed by climate change.
“Through the Extremes Initiative we’ve been working with several partners in the insurance and reinsurance industries, and talking to many more,” Sobel said. “It’s an industry that already has a sophisticated understanding of natural hazards — we have been learning from them as much as they from us. But other industries have less expertise. I hope we can start to build broader ties in order to increase the use of our science in the private sector.”
Climate change is poised to become an increasingly significant factor shaping future investment decisions. The 2014 “Risky Business” study, an effort led by former government officials and private sector executives Michael Bloomberg, Henry Paulsen, and Tom Steyer, summarized the risks facing the U.S. economy as a result of climate change.
The study estimates yearly costs will approach 1-2% of U.S. GDP, or between $150-300 billion annually due to losses from coastal property, infrastructure, agriculture, energy, and public health sectors. And in 2016, the World Economic Forum named climate change the most severe global economic risk.
The event organizers see the collaborative approach of the conference as a way to improve understanding of how climate affects investments and integrate scientific knowledge into climate-sensitive decisions.
“Our goal is to build partnerships,” de Menocal said. “I’d like this to be the first of many meetings where new scientific discoveries and ideas are communicated to the business community, and they use the results to shape their portfolios. This is where the rubber meets the road on climate adaptation: Working together to shape rational business responses to the emerging risks and opportunities from climate change.”