Global warming and extreme weather investment risks

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Environmentally focused investors often consider climate risks. However, potential liabilities for damages from extreme weather events due to emissions from carbon-intensive sectors present risks that may not be reflected in current share prices. Given the devastation of the 2017 Atlantic hurricane season, it is worth asking how close we are to some companies or sectors being held liable, at least partially, for their activities. The answer may be that this is closer than many expect. The evolving field of extreme weather event-attribution serves as a good example of how new science can both raise thought-provoking and important questions regarding the appropriate actions of both investors and companies under a changing climate and answer them with increasing confidence.

In a collaboration with practicing climate scientists from the University of Oxford and the Humboldt Universität of Berlin, Dr Quintin Rayer presented a paper to the Emerging Risks in Finance conference run by Concordia University, Montreal, Canada.

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Q G Rayer, P Pfleiderer and K Haustein (2019), Global warming and extreme weather investment risks, Emerging Risks in Finance: Challenges and Opportunities for Investors, Institutions and Regulators, Conference and Joint Academic/Practitioner Workshop, Presented by: T Walker and D Gramlich, Concordia University, John Molson School of Business, Montreal, Canada, 20-21 September 2019 (abstract).

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