Climate Risk: A lot is standing on the line for Investors

At the current pace we're going, it is unlikely we will meet our climate goals. Financial markets will not escape untouched and clearly, if we don't step up to take more action we have to expect hugely damaging repercussions. Investors and pension funds are starting to take climate risks into account however, to achieve our goals, structural change is needed within politics, society and the economy. These structural changes pose both risks and opportunities for investors and businesses.

But what kind of risks await investors if we do not meet our climate goals? Nico Kröner from South Pole says that there won't be a linear increase of risk for every degree of global warming but that physical risks will actually grow exponentially, as a result of more extreme weather conditions such as droughts, heat waves and hurricanes.
The risks that global warming poses can be calculated based on the location of the company and its value chain. This risk assessment can be applied to both investments and also to indexes such as the DAX and the SMI. If we continue on the trajectory we are on, we are shooting towards an average global temperature increase of 3 to 4 degrees. This would have severe consequences with an estimation of -36% for the DAX and -43% for the SMI.
But structural changes and transition carry opportunities as well as risks. If companies take action and have sufficient technologies in place to overcome the transitions, the opportunities can actually overtake the risks [not really sure what exactly you're saying here], says Anja Ludzuweit from Carbon Delta.

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