Investors Need Climate Change Behavioral Shift: Study

Most investors need to make a significant behavioral shift and start factoring climate change into their portfolio risk management, a study on its impact on financial market returns found on Thursday.

Government officials are meeting in Germany this month to work on a global deal to cut greenhouse gas emissions due to be agreed in six months' time in Paris. There is increasing debate about the impact of climate change on investments, particularly in fossil fuels.

A study by consultants Mercer - backed by the International Finance Corporation, the World Bank's private sector arm, and British and German government development units - modeled a range of outcomes on the impact on a range of assets and sectors out to 2050 under four temperature change scenarios.

For good or bad, climate change would impact investment returns and ignoring it was not a savvy option, the report said, although for long-term diversified investors, a 2 degree temperature increase would not result in negative returns.

"This new study led by Mercer could not be more timely on the road to the UN Climate Change conference in Paris," said IFC Director for Climate Change Christian Grossman.

"It can also send a clear message to policy-makers that resolving the uncertainty around the policy direction of carbon pricing will be an important first step toward transitioning to a low carbon economy," he added.

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