Around 20 percent of all sectors are directly subjected to climate risk. The major affected companies depend on fossil fuels, like energy, logistics and transportation, agriculture, and allied industries.
Over the past twenty years, the average increase in surface temperatures worldwide has been around 0.6 degrees celsius. The polar regions have lost a lot of ice. The northern hemisphere has most of the landmass has heated up, frequency of drought, increase in cyclones, typhoons, other adverse weather events have all increased. Sea temperatures too also rose.
Climate changes are directly impacting all biological-based commodities like agriculture, fisheries, and animal farming.
In response to these climate changes, the world is trying to reduce its dependence on fossil fuels by focusing on renewables, low emission energy transport systems like electric vehicles, building carbon banks, etc.
Most long-term investors realize that their long-term investments will get impacted due to the increase in stranded assets and direct impact on Agri commodities.
Blackrock, HSBC, most Nordic sovereign funds, and others regularly model climate risk in all their investment analysis.
Climate risk is impacting all investment classes – equity, debt, alternatives, etc. Investors beware!.