Investors are being urged to focus on climate adaptation and resilience as US firms increasingly turn away from environmental, social and governance initiatives.
Experts from the University of Cambridge’s Institute for Sustainability Leadership (CISL) and Investment Leaders Group called on investors to prepare for a hotter world as they unveiled a roadmap to manage physical climate risks within portfolios.
The guide, released on Wednesday, aims to equip investors with tools and strategies to back companies focussing on adapting to the impacts of global warming.
It comes as corporate America shifts back towards more conservative social and political stances following Donald Trumps US election win.
Last week, Meta scrapped its diversity, equality and inclusion (DEI) programme and BlackRock left the UN-backed Net Zero Asset Managers alliance – the latest in a growing list of US firms ditching DEI initiatives and leaving industry groups focussed on driving the net zero transition.
Dr Nina Seega, director of the CISL’s Centre for Sustainable Finance, said: “Even as the political tides are turning away from a focus on sustainability, the impacts of climate change are becoming more and more deadly and damaging.
“Investors’ who want to protect their money will need to look at climate impacts and adaptation.
“Anyone who cares about long-term value will need to both invest in resilience of their portfolio and support a more resilient economy as a whole.”
Often adaptation and resilience do not receive the same attention as “mitigation” – efforts to curb planet-heating emissions and limit global warming.
But the CISL experts said investors need to respond to the financial risk posed by increasing extreme weather events, citing the widespread damage of the current Los Angeles wildfires, last year’s deadly flooding in Valencia, Spain, and Hurricane Milton causing estimated losses as high as 34 billion dollars.
They argued that investors not only play a critical role in addressing the vulnerability of both communities and financial systems, but resilient strategies offer an essential competitive advantage.
The CISL roadmap outlines how early integration of climate risks in the investment process enhances preparedness and decision-making.
It also explores how investors can engage with policymakers, businesses and the financial sector to drive systemic changes, including by aligning private capital with global adaptation goals, enhancing corporate disclosure standards and collaborating with the broader financial system to unlock innovative financing models.
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