What Happens in a 3°C World?
Welcome to ISSUE 3 of Sustainability Pathways.
On May 17, MSCI’s Capital for Climate Action Conference addressed the physical risks facing the Asia-Pacific region in a 3°C warmer world.
Physical risk modeling is a key component of MSCI’s ESG research. We use it to help asset owners identify climate exposures and build a solid platform for engagement.
Read on for more — including highlights from the conference — to find out how asset owners can better protect their investments while contributing to a more sustainable future.
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The economics of physical risk
The physical risks of climate change are already apparent in Asia-Pacific. Researchers have warned that 90% of India is now in an extreme heat danger zone, and the outlook is bleak: carbon emissions are still rising, and the world is still warming. Of the 100 most riskiest cities facing the greatest environmental risks, 99 are in Asia.
We mapped physical assets operated by constituents of the MSCI AC Asia IMI Index onto some of the hazards of a 3ºC temperature rise. We found that 17% of these assets would be exposed to coastal flooding, 65% to tropical cyclones, and 100% to extreme heat.
Physical risks in Asia-Pacific: Extreme heat
Using climate data to model extreme weather events allows investors to make informed mitigation decisions and highlight the cost of inaction to companies in their portfolio.
Asset owners will have a critical role to play in the low-carbon transition. The panel at the Asia-Pacific stream of this year’s Capital for Climate Action Conference stressed the need to manage exposure, both at a portfolio level and for individual assets and commended three steps already visible in the market:
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Taking action on climate:
Physical risks threaten investment returns but also offer opportunity. Watch this video to find out more.
Putting Climate Ambition into Practice - A Conversation with Ilmarinen and SGX Group
Taking an asset-owner perspective, this webinar will examine how to integrate climate considerations in portfolios and help realize net-zero economies.
Register here.
Key resources for asset owners
Consider these tools to help set and achieve net-zero targets, and support engagement with investee companies.
Recent developments
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