The subject of climate risk is a complex one, driven by evolving regulation and developing knowledge on the topic. This is driving a widening of expectations in the way that asset managers and pension schemes manage and report on climate risks.
The conversation is evolving: The rise of natural capital
In combination with climate change, the risk of biodiversity loss and degradation of ecosystems will become an important part of environmental risk assessments undertaken by asset managers and pension schemes. Why? Because companies and bond issuers in which asset managers and pension schemes invest will depend directly on nature for operations, supply chain performance, real estate asset values, physical security and business continuity. Many companies may also have hidden dependencies on nature and biodiversity in their supply chains.
According to the World Economic Forum, the world’s 7.6 billion people represent only 0.01% of all living things by weight. However, humanity has already caused the loss of 83% of all wild mammals and half of all plants. Furthermore, more than half the world’s GDP is moderately dependent on nature. As population growth expanded, along with the demand for...