Climate Change Puts Trillions of Dollars of Assets at Risk: Study

Trillions of dollars of non-bank financial assets around the world are vulnerable to the effects of global warming, according to a study on Monday that says tougher action to curb greenhouse gas emissions makes sense for investors.

Rising temperatures and the dislocation caused by related droughts, floods and heatwaves will slow global economic growth and damage the performance of stocks and bonds, according to the report, led by the London School of Economics.

"It makes financial sense to a risk-neutral investor to cut emissions, and even more so to the risk-averse," lead author Professor Simon Dietz, an environmental economist, told Reuters.

A global climate summit in Paris last December set a goal of limiting global warming to "well below" 2 degrees Celsius (3.6 Fahrenheit) above pre-industrial times, while leaving open precisely how this would be achieved.

If the rise were limited to 2C by 2100, the study's central scenario put the total of current financial assets that could be damaged at $1.7 trillion.  But if the temperature rose a further 0.5C by the end of the century, $2.5 trillion would be at risk under the most likely scenario.

Global regulators in the Financial Stability Board say all the world's current non-bank financial assets are worth $143 trillion.

At the extremes of the study's thousands of scenarios based on a 2.5C rise, the value at risk ranges from 0.5 percent of total financial assets up to a worst case of 17 percent, or $24 trillion.

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