The impact of climate change presents a systemic investment risk, making the importance of an investment's environmental footprint more critical than ever before. The world has already experienced a rise of around 1°C in global temperatures over the preindustrial period and has started seeing the impacts of climate change in the form of extraordinary weather events, shrinking glaciers, and changing rainfall patterns.
To be successful in limiting the adverse impacts of climate change, a fundamental shift is needed in the relationship between the economy and the environment. While financial markets are well positioned to play a leading role, ultimately they will only be effective if climate change regulation is in place. However, when it comes to climate change, a mismatch exists between policy and science. Over the past year, we have seen strong momentum to close that gap—a trend we expect to continue as we lead up to the 26th United Nations Climate Change Conference (COP26) in Glasgow in November.
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