Financial markets risk major disruptions by relying on business-as-usual

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  • 23 Sep 2019 12:00 AM
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Markets Face Major Risks Over Lax Climate Forecasts, Top Investors Warn

Financial markets risk major disruptions by relying on business-as-usual forecasts that underestimate the impact of climate-change policies that are expected to abruptly tighten next decade, a leading group of investors has warned. The report by the U.N.-backed Principles of Responsible Investing (PRI), representing investors with $86 trillion of assets under management, joins a growing chorus of warnings that forecasts and investments by oil and gas companies are out of sync with the pace needed to meet energy transition targets. Scientists view a rise of more than 1.5°C in global average temperatures as a tipping point where climate impacts such as sea-level rise, natural disasters, forced migration, failed harvests and deadly heatwaves will rapidly start to intensify. PRI released a new forecast which it said “aims to fundamentally reset investors’ forward-looking risk management, strategic asset allocation and company engagement”. The study, branded the Inevitable Policy Response (IPR), predicts “an abrupt and disruptive” government policy response by 2025 in attempt to keep climate change to under the 1.5°C threshold.

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