COVID-19 Marks Turning Point in Climate Investment

COVID-19 has dramatically affected investment markets during this extremely challenging period. How could it potentially change climate investment going forward?

During an event organized by the Coalition for Climate Resilient Investment (“CCRI”), industry leaders hypothesized that “a global infrastructure investment of $90 trillion will be needed over the next decade to achieve global growth expectations – and success will be contingent upon a shift in the way projects are financed to build resilience to climate change.”

According to CCRI, investment decisions made now will lock in either a global network of climate-resilient infrastructure or a collection of exposed assets that will make social and economic activity vulnerable to client risk.

Experts also urged stakeholders to act quickly to address three (3) specific weaknesses they identified as critical barriers to properly quantifying climate risk and shifting toward a more climate-resilient economy:

1. There is a need to support longer-term incentive structures that promote resilience in their efforts to encourage and reward an appropriate consideration of climate risks in investment decision-making.
2. Better data, supported by sophisticated analytical tools, is needed to properly assess and price climate risk.
3. A collaborative approach focused on building consensus is pivotal.

Despite the human and economic crisis attached to it, COVID-19 also constitutes a unique opportunity to ensure that climate risk is embedded in stimulus plans and decision-making more broadly. The expectation and ultimate goal are that we might see lives and economies in developing and developed regions become more resilient by advancing more efficient investment decision-making practices and addressing the weaknesses in the transformation.
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SOURCE:https://www.insurancebusinessmag.com/us/news/environmental/covid19-marks-turning-point-in-climate-investment-226867.aspx