How investors can manage the risks of climate change

Investors need to apply basic principles

clock • 4 min read
Jim Whittington of Dimensional Fund Advisors
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Jim Whittington of Dimensional Fund Advisors

There are many reasons why investors care about climate risks

Concern for the environment might be the most obvious, but many investors also believe that long-term risk management must incorporate climate risks; be they the physical risks of a warmer planet, or the transitional risks as we adapt to a carbon-neutral economy. Regulators around the world are also demanding better management and disclosure of sustainability risks. When it comes to addressing exposure to climate risks in a portfolio, we think investors should start by applying several basic principles. Acknowledge market prices incorporate material risks Ample empirical research suppo...

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