ABSTRACT
The potential impacts of climate change as a systemic issue – arguably the investment meta-theme of our time – represents a challenge for large global investors (also known as: “universal owners”; see UNEP FI, 2011), with multi-decade time horizons and portfolio exposure across the global economy. Environmental, scientific, political, and technological developments continue to evolve and disrupt incumbent industries and regional economies. Investors often use scenario analysis as a part of strategic asset allocation and portfolio construction decisions. When it comes to climate change, many questions arise regarding available data, methods used, and their application. Econometric modelling that uses integrated data, while incomplete and evolving, is being used by investors to translate into scenarios for assessing the additional climate impact on investment return in tandem with bottom–up methods. We can expect the data explosion associated with better assessing earth and human systems and their interactions to become critical to climate action for investors. 1
