Why climate risk matters
It can affect assets, supply chains, demand, insurance, financing, regulation, litigation, and long-term value.
How it is applied
Investors map physical and transition exposures, time horizons, scenarios, adaptation, emissions, policy, technology, and portfolio concentration.
Portfolio example
Coastal property faces flood damage while a manufacturer faces carbon pricing and changing customer demand.
How to interpret it
Scenario losses are conditional estimates, not forecasts. Risk can be material before physical effects occur.
Limitations and common misconceptions
Data and models are uncertain, horizons are long, and correlations and adaptation responses are difficult to estimate.
Sources and further reading
- IFRS S2 Climate-related DisclosuresIFRS Foundation
- What is Responsible Investment?Principles for Responsible Investment