By Fiona Reynolds (@Fireynolds), CEO, the PRI
The reality of climate change will inevitably catch up with governments across the globe. When it comes to tangible political progress at events like this week’s G20 summit, it can often seem like a case of two steps forward, one step back – or in the case of some governments, no steps forward. It is not just governments, however, who need to step up to the plate on taking action on climate change; it’s also financial markets. At present beyond a few leaders, there is little evidence that markets are pricing in the risks that climate change represents.
The drivers for policy action on climate are inescapable. Advances in technology mean clean energy is often cheaper than carbon-intensive sources and more extreme weather patterns will raise the heat on national leaders from the public. The effects of climate change will begin to affect everything from food production to migration and national security. Business is calling for action to create certainty.
The effects of climate change will begin to affect everything from food production to migration and national security. Business is calling for action to create certainty
Faced with this, it is inconceivable that at some point governments will not be forced to take robust action and we believe that this will happen by mid-2020s. Policy responses are inevitable – it is a matter of not “if” but “when”. The longer the delay, the more abrupt, forceful and disruptive that policy response will be, especially for carbon-intensive industries.
Over the next few months, we will release a body of work that we call the “Inevitable Policy Response”. It is designed to be a central business planning case for investors, corporates and regulators. The modelling will assess the impact of that risk in a real world context, in a transparent and detailed portfolio for the PRI’s 2,000 investor signatories representing over US$83 trillion in assets under management.
If we believe climate science and that real change is inevitable, it’s time investors start taking action.
This blog is written by PRI staff members and guest contributors. Our goal is to contribute to the broader debate around topical issues and to help showcase some of our research and other work that we undertake in support of our signatories.
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