UK - Companies and their investors are failing to take changes in weather patterns properly into account in their investment decisions, latest research revealed.
A report - Managing the Unavoidable: investment implications of a changing climate, published today by Henderson Global Investors, Insight Investment, and the Universities Superannuation Scheme - found most attention has been paid to extreme weather effects such as flood risk and increased ferocity of storms.
But it said investors had paid much less attention to the incremental changes of changing weather patterns - such as the effects of incremental rise in ambient temperatures on building performance and energy efficiency.
Henderson Global Investors head of SRI research Seb Beloe said: "These incremental changes are already starting to affect operational costs and, in some cases, asset values.
"The research underpinning this report suggests that we as investors need to pay much greater attention to how climate change/weather affects our investment decisions. This will require paying attention to how climate change adaptation will affect company-specific business models, value drivers, strategy, governance, cash flows and assets".
USS co-head of responsible investment David Russell added: "Most companies see climate change primarily in terms of downside risk management. However, from an investment perspective, climate change may also present opportunities."
The report called on investors to ensure that companies have clear strategies for responding to climate change and reporting on risk assessment processes.
It also urged investors to play a much more proactive role in public policy debates on adaptation to the effects of climate change, highlighting a need to develop long-term policies which enable companies to plan and invest appropriately.
The report - produced with specialist input from consultancy firm Acclimatise - was published at the same time as four sector specific reports covering electric utilities, water utilities, real estate and oil and gas.
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