BlackRock, through its Investment Institute, has just launched the report “Mega Forces – Climate resilience: an emerging investment theme”.
The passage discusses the escalating impact of climate change globally, leading to more extreme weather events and rising temperatures. In response, there is a growing effort across businesses, governments, and society to address climate change by building resilience and transitioning to a low-carbon economy. The paper focuses on the importance of building resilience, as climate-related damages are expected to affect global GDP significantly by 2050. The need for extensive investment in products and solutions that enhance climate resilience is highlighted, encompassing early monitoring systems, climate technology, and infrastructure retrofitting. The authors predict a rising demand for resilience-related products and services, driven by policy, regulation, and market dynamics. Climate resilience is identified as an emerging investment theme, distinct from, yet complementary to, the low-carbon transition. The investment opportunities span various sectors, including those typically underrepresented in low-carbon investments. The study proposes opportunities for investment in climate resilience solutions across public and private equity and debt markets, with potential prospects not fully appreciated by financial markets. The authors use a proprietary resilience metric for public equities, enabling the identification of companies supporting climate resilience, and recommend a concentrated thematic basket for investment, considering the uncertainties associated with this new theme. Overall, the passage underscores the significance of climate resilience as a crucial response to climate change, offering diverse investment opportunities.
The report is available here.
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