Category: Finance

Nobel prize-winning economics of climate change is misleading and dangerous – here’s why

Nobel prize-winning economics of climate change is misleading and dangerous – here’s why

By Steve Keen

While climate scientists warn that climate change could be catastrophic, economists such as 2018 Nobel prize winner William Nordhaus assert that it will be nowhere near as damaging. In a 2018 paper published after he was awarded the prize, Nordhaus claimed that 3°C of warming would reduce global GDP by just 2.1%, compared to what it would be in the total absence of climate change. Even a 6°C increase in global temperature, he claimed, would reduce GDP by just 8.5%.

If you find reassurance in those mild estimates of damage, be warned. In a newly published paper, I have demonstrated that the data on which these estimates are based relies upon seriously flawed assumptions.

Nordhaus’s celebrated work, which, according to the Nobel committee, has “brought us considerably closer to answering the question of how we can achieve sustained and sustainable global economic growth”, gives governments a reason to give climate change a low priority.

His estimates imply that the costs of addressing climate change exceed the benefits until global warming reaches 4°C, and that a mild carbon tax will be sufficient to stabilise temperatures at this level at an overall cost of less than 4% of GDP in 120 year’s time. Unfortunately, these numbers are based on empirical estimates that are not merely wrong, but irrelevant.

Nordhaus (and about 20 like-minded economists) used two main methods to derive sanguine estimates of the economic consequences of climate change: the “enumerative method” and the “statistical method”. But my research shows neither stand up to scrutiny.

The ‘enumerative method’

In the enumerative method, to quote neoclassical climate change economist Richard Tol, “estimates of the ‘physical effects’ of climate change are obtained one by one from natural science papers … and added up”.

This sounds reasonable, until you realise that the way this method has been deployed ignores industries that account for 87% of GDP, on the assumption that they “are undertaken in carefully controlled environments that will not be directly affected by climate change”.

Nordhaus’s list of industries that he assumed would be unaffected includes all manufacturing, underground mining, transportation, communication, finance, insurance and non-coastal real estate, retail and wholesale trade, and government services. It is everything that is not directly exposed to the elements: effectively, everything that happens indoors or underground. Two decades after Nordhaus first made this assumption in 1991, the economics section of the IPCC Report repeated it:

Economic activities such as agriculture, forestry, fisheries, and mining are exposed to the weather and thus vulnerable to climate change. Other economic activities, such as manufacturing and services, largely take place in controlled environments and are not really exposed to climate change.

Truck driving along mountain road.
It’s surely obvious that industries such as transport will be affected by the climate crisis. Rodrigo Abreu/Unsplash

This is mistaking the weather for the climate. Climate change will affect all industries. It could turn fertile regions into deserts, force farms – and the cities they support – to move faster than topsoil can develop, create storms that can blow down those “carefully controlled environments”, and firestorms that burn them to the ground.

It could force us to eliminate the use of fossil fuels before we have sufficient renewable energy in place. The output of those “carefully controlled environments” will fall in concert with the decline in available energy. The assumption that anything done indoors will be unaffected by climate change is absurd. And if this is wrong, then so are the conclusions based upon it.

The same applies to the “statistical method”. As I explained in a previous article, this method assumes that the relationship between temperature and GDP today could be used to predict what will happen as the whole planet’s climate changes. But while temperature isn’t a particularly important factor in economic output today, climate change will do much more than simply raise individual countries’ temperature by a few degrees – the disruption it will cause is enormous.

The damage function

Nonetheless, these optimistic estimates were used to calibrate Nordhaus’s so-called “damage function”, a simple equation that predicts a small and smooth fall in GDP from a given rise in temperature. But climate change will not be a smooth process: there will be tipping points.

Nordhaus justified using a smooth equation by incorrectly claiming that climate scientists, including Tim Lenton from the University of Exeter, had concluded that there were “no critical tipping elements with a time horizon less than 300 years until global temperatures have increased by at least 3°C”. In fact, Lenton and his colleagues identified Arctic summer sea ice as a critical tipping point that was likely to be triggered in the next decade or two by changes of between 0.5°C and 2°C:

We conclude that the greatest (and clearest) threat is to the Arctic with summer sea-ice loss likely to occur long before (and potentially contribute to) GIS [Greenland ice sheet] melt.

The reason these mistakes are so significant is that, despite the flawed assumptions on which it is based, this work has been taken seriously by politicians, as Nordhaus’s Nobel prize recognises. To these policymakers, a prediction of future levels of GDP is far easier to understand than unfamiliar concepts like the viability of the ecosystem. They have been misled by comforting numbers that bear no relation to what climate change will, in fact, do to our economies.


This article was originally posted on The Conversation.
Cover photo by Axel Fassio/CIFOR
Webinar: Risk-Informed Investment for Macro-Economic Financial Stability

Webinar: Risk-Informed Investment for Macro-Economic Financial Stability

The UN Office for Disaster Risk Reduction (UNDRR) is hosting a webinar on Tuesday the 15th of September from 14:00-15:15 CET.

This is the first in a series of four webinars examining the case for risk informed investment as a critical element of macro-economic financial stability and the achievement of the SDGs. It will look at examples where we can draw lessons from progress to date, identify the gaps and explore opportunities to address them. This series builds on a report on the integration of disaster risk reduction and climate action into sustainable financing published by UNDRR in 2019 in the European context, and accompanies the development of a new global study to identify concrete actions, evidence and tools to integrate multi-hazard and systemic risk approaches into the implementation of the 2030 Agenda for Sustainable Development in support of more risk-informed investment and finance.

Speakers include:

Mami Mizutori – UN Secretary-General’s Special Representative for Disaster Risk Reduction

Steve Waygood – Chief Responsible InvestmentOfficer, Aviva Investors

Sirpa Pietikäinen – Member of the European Parliament

Felix Suntheim – Financial Sector Expert, IMF

Register here.

Financing resilience in Honduras: final webinar and lessons learnt

Financing resilience in Honduras: final webinar and lessons learnt

By Caroline Fouvet and Laura Canevari

Nine months after its launch, the IDB Invest-funded initiative to support Honduran banks identify climate resilient investments, concluded during a well-attended webinar. Organised by IDB Invest and AHIBA (Asociación Hondureña de Instituciones Bancarias) and facilitated by Acclimatise, the event provided an opportunity to go over the project’s methodology to identify resilient investments and to hear national technology providers’ perspectives on market trends for resilient technologies, their benefits and financing challenges. Further, IDB Invest and Bancolombia also reflected on their experience promoting sustainable finance across Latin America and its benefits. Overall, the ultimate objective was to promote a better understanding of the business opportunities arising from financing technologies and products that can increase climate resilience in at-high-risk sectors.

As 60 people, including over 30 representatives from the banking sector, tuned into the webinar to hear about the initiative’s insights and lessons learnt, speakers went through the following key elements:

Financing resilient solutions requires innovation in how investment opportunities are identified and framed

In order to determine how to finance climate resilient solutions, banks should first analyse their investment portfolio to see what sectors are the most relevant, which of them are the most vulnerable to climate change and what climate change risks they are facing. Grounded on this understanding of climate risks in their portfolios, they can then identify those technologies, products and services that could help avoid, minimise and manage those risks. They can also determine what is the market potential for those technologies and carry assessments of the business environment. This is all the more relevant in a country considered one of the most vulnerable to climate change globally.

It is important also for banks to understand that the mechanisms to finance resilient solutions differs from traditional financing in that:

  • The purpose of the credits must be clear and demonstrate climate resilience benefits;
  • The process for the selection of eligible investments must be transparent and eligibility criteria on the resilience benefits must be incorporated in the credit approval process;
  • Resources are administered to ensure traceability of credits and portfolios dedicated to resilient investments
  • Monitoring and evaluation is undertaken to ensure access to information on climate resilient credits and their achieved benefits

Similarly, banks must be aware that commercialising resilient products and how to incentivise and increase credit demand also differs from traditional financing and the key role played by technical assistance and strategic alliances with solution providers.

Financing resilient solutions is a business opportunity for banks in Honduras

The webinar has also helped to demonstrate that there is already a market for a number of resilient solutions in the country, driven by companies’ need to improve their competitiveness and ensure their survival in the face of climate impacts. To make the case, Acclimatise presented 11 resilient solutions that were identified and characterised following the abovementioned approach, and reflected on the observed demand and market potential and the return on investment profile of these investment opportunities.

Similarly, representatives from  Inelec, Frio Industrial and Durman, which are local providers for some of the resilient solutions identified, took the floor to introduce these technologies, including energy efficient air conditioning, smart cooling solutions and solar irrigation. The providers reflected on the ROI profile of each of these investments, noting a steady increase in the market demand for their products and services; but acknowledging that certain barriers still remain, in particular the high cost of the initial investment and a lack of adequate financial products to support investment in these technologies are obstacles still to be surpassed.

As noted by Sandra Rivera from PESIC (the Energy Efficiency Project in the Industrial and Commercial Sectors (PESIC), a concrete way to push resilient technologies forward is to build up strategic alliances between technology providers, business owners and engineers providing technical assistance and confirming the technologies’ resilience benefits, such as lower energy consumption. PESIC aims both to increase technical and institutional capacities in energy efficiency, and to develop financial instruments that favour investments in energy efficiency equipment and practices.

Another important avenue to promote resilient investments is through the development of strategic alliances between the banks and the different providers and distributors of climate resilient solutions in Honduras. AHIBA, as the national association of commercial banks in the country, has an important role to play in this, as it can support the development of these alliances and the transfer and sharing of experiences promoting resilient investments between the banks.

Practical experiences and lessons learnt in capturing “green” and “resilient” financing opportunities across Latin America

The event also featured reflections from IDB Invest, who described the mechanisms put in place to promote sustainable finance on the region, including green and sustainable bonds. In addition, the Colombia bank Bancolombia share its experience in the development of credit lines to support sustainable and climate resilience investments. Bancolombia highlighted the importance that adhering to international protocols (such as the Equator Principles and CDP) as well as national ones (i.e. the Green Protocol) and the need to have buy in from the board of directors. Moreover, they noted that having an  Environmental and Social Risk Management system significantly facilitated the development of a green strategy, as well as the development of a taxonomy to clearly define what constitutes a green and a resilient investment, to provide banks with an operational framework. Many banks indeed already finance climate resilience, but it is likely they are not yet aware of it, given they lack a proper taxonomy and system to track credits that build climate resilience.

Both presenters agreed on the benefits of sustainable finance in general and climate resilient finance in particular. These benefits include, among others, better access to long-term financing in capital markets, improved value of customer franchise and response to demands for socially responsible investments. When it comes to financing climate resilience, this enables banks to avoid losses arising from climate impacts and potential associated default payments on their loans, while also catering to the financing needs of new market segments, and as such expanding their activity.

In the time of COVID-19, the need to foster a green recovery has clearly emerged. This includes the importance of considering climate change resilience to ensure the new economy is built upon climate-proof foundations. Banks henceforth occupy a centre role in this endeavour, in Honduras and across the world.  


Cover photo of the Honduras Mountains. By Gerardo Predo on Unsplash.
Significant Potential to Increase Impact of Climate Finance, New Report Finds

Significant Potential to Increase Impact of Climate Finance, New Report Finds

Climate finance can become significantly more transformative by addressing systemic barriers to low carbon and climate resilient investments, according to a new World Bank report.

Although global climate finance has grown significantly in recent years, there remains a sizable gap between the public resources that are available and the investment needs to address climate change in developing countries.

The report makes the case that while stimulus packages to combat the coronavirus-induced economic slowdown can help countries shape a sustainable recovery, they will only be transformative if the limited public funding for climate action leverages substantially more funding from other sources.

“This is exactly the right time to look at how we can make climate finance more effective and more impactful,” says Marc Sadler, Practice Manager of the World Bank’s Climate Change Fund Management Unit“The increased realization of economic benefits from clean development pathways allow climate finance spending to be much more catalytic. The critical levers identified in this report can – with strategic allocation of climate finance – unlock greater value for money and help countries build back better.”

The report identifies eight sets of climate levers and analyzes how climate finance can best be deployed to maximize their transformative impact for developing countries to achieve clean development goals. The eight climate levers are: project-based investments, financial sector reform, fiscal policy, sectoral policies, trade policy, innovation, carbon markets and climate intelligence.

The report proposes a set of recommendations for transformative climate finance, including:

  • Employ a wider variety of financial instruments: Expanding the use of instruments such as policy-based finance, results-based finance, equity finance and guarantees can enhance the impact of climate finance deployed.
  • Enhance leverage on a wider, systemic basis: Public climate finance should maximize leverage from private and government sources. The scope and impact of this leveraging should go beyond project boundaries to achieve economy-wide impacts.
  • Link to long-term strategic planning: Financing decisions should be aligned with long-term strategies for low-carbon resilient development, while avoiding spending that is inconsistent.
  • Invest in “climate intelligence”: Appropriate knowledge generation can have a powerful effect: include climate impact and vulnerability maps; early warning technologies; models for long-term scenario simulation and planning; and physical and transitional risk assessment tools.

“The climate finance system has made great strides in the past decade, increasing in both volume and impact,” says Jonathan Coony, World Bank Senior Carbon Finance Specialist and report co-author“But circumstances have changed over that time and reviewing the programming of scarce public finance to deliver transformation at scale will be essential to help our clients shape a sustainable recovery.”

Transformative Climate Finance: A new approach for climate finance to achieve low-carbon resilient development in developing countries is available for download here. The report was launched as part of the Kickstarting the Sustainable Recovery series organized by the World Bank’s Climate Change Group in partnership with Innovate4Climate to shed light on how sustainable finance can be part of the COVID-19 recovery and help countries build back better and stronger.

Download the report here.


This press release was originally published on the World Bank website.
Cover photo by Koshy Koshy on Flickr.
Acclimatise releases its latest GCF proposal toolkit

Acclimatise releases its latest GCF proposal toolkit

Three years after producing the first guide of this kind, Acclimatise is releasing today its latest Green Climate Fund (GCF) Proposal Toolkit. This guide integrates the latest GCF policy changes and funding proposal template v2.0 in order to provide the most recent guidance to project proponents, accredited entities and national designated authorities and help them to navigate the ever-changing GCF project requirements.

Our authors have leveraged their experience in assisting countries and organisations access GCF funding and supporting the GCF Secretariat share tips and guidelines to help you work in the most efficient way possible. You can find more information about how Acclimatise can help you mobilise, catalyse, and leverage public and private capital to deliver your climate investment strategies and financing for climate-resilience solutions on our website. Contact the authors: Ms. Virginie Fayolle & Ms. Maya Dhanjal.

Download the toolkit by clicking here.


Cover photo by Joe Saade, UN Women.
2019 picks from the Acclimatise article archive – Financial Services

2019 picks from the Acclimatise article archive – Financial Services

The start of a new year is a time for setting new resolutions for the year ahead, whilst giving consideration to moments that shaped us over the past year. With that spirit of reflection in mind, we sifted through our network’s article archive and selected some of our favourites from the past year. We’ve sorted our favourite articles by topic, to make up a six-part series throughout the month of January.

We kick off with six articles related to climate adaptation for the financial services sector. 2019 was another important year of progress with momentum continuing to grow behind the recommendations of the Taskforce on Climate-related Financial Disclosure (TCFD). The noises from central banks including Bank of England Governor, Mark Carney, indicate that they are prepared to take further action, if banks and investors are perceived to be dragging their heals on the issue. The Bank of England and the French financial regulator have both indicated that they will begin climate stress testing of banks this year.

In the meantime, there remains a need for more standardisation of approaches for climate risk disclosure in the industry. Acclimatise continues to work with leading banks and investors to develop methodologies to help them understand, measure and manage the physical climate risks to their loan portfolios and investments.

Advancing climate-related financial risk discourse in the financial sector

By Laura Canevari

The financial sector must play a fundamental role in the transition to a low carbon and climate-resilient future. To do this, there is a need for a systemic shift in the way the financial system operates and in the way investment decisions are made. Through the release of the TCFD Recommendations in 2017, financial institutions, along with corporates, have been given a robust compass with which to navigate climate disclosures.

Read the full article here.

Bank of the England plans to test climate resilience of UK banks

By Acclimatise news

Mark Carney, governor of the Bank of England, said the central bank has plans to include the impact of climate change in its UK bank stress tests. Since 2017, the Bank of England assesses on a yearly basis how well the UK’s biggest lenders could withstand a shock without needing a bailout from taxpayers. This announcement comes after a survey completed by the Bank of England in 2018 showed that only 10% of banks were considering their long-term climate change risks.

Read the full article here.

Climate change adaptation is the “biggest investment opportunity of this generation,” says new UNEP FI report

By Will Bugler

In September 2019, the UNEP Finance Initiative launched a technical background paper on adaptation finance, identifying barriers and opportunities for scaling up financing for climate change adaptation and resilience building. The paper, ‘Driving Finance Today for the Climate Resilient Society of Tomorrow’ refers to adaptation as “the biggest investment opportunity of this generation’.

Read the full article here.

Investor portfolios failing to account for climate risk says BlackRock

By Acclimatise News

A report by the BlackRock Institute accuses investors of under-pricing the impact of climate-related risks and advises a restructuring of assessments of asset vulnerabilities. The report, ‘Getting physical: Scenario analysis for assessing climate risk’ marks an important next step.

Read the full article here.

Climate poses direct risk to real estate investment says ULI report

By Will Bugler

In a recent published just last year, the Urban Land Institute and real-estate investment management firm Heitman assess the potential impacts of climate change on real estate assets and give some direction as to what investment managers and institutional investors might do to understand and reduce their climate risk disclosure.

Read the full article here.

COP 25 signals public and private sectors coming together to green the financial system

By Caroline Fouvet

Multiple side events involving green finance emerged at the 2019 UNFCCC climate negotiations this past year. One common thread was the importance of collaboration between public sector-led efforts and financial institutions’ (FIs) initiatives to build a sustainable low-carbon and climate resilient financial system.

Read the full article here.


Climate change could be bad news for your retirement plans

Climate change could be bad news for your retirement plans

By Georgina Wade

A survey released just last month by Natixis Investment Managers paints a grim picture for people hoping for an old age free of financial stress. An accompanying report on the impact of global warming making the findings even worse.

Taken together, the studies suggest that retirees are at risk, due to a trifecta of issues resulting from foreseeable low interest rates, longer lifespans and the high costs of climate change.

Low interest rates may stimulate borrowing, but they also present a significant hurdle for those saving for retirement and those looking to generate income. Additionally, rapidly aging populations and longevity can result in an unbalanced old-age dependency ratio: the ratio of people over the age of 65 to the working-age population, age 15-65. This may be most important for Generation Z, with UN projections showing that by 2065, retirees should plan for living another 24 years in retirement.

Amongst these, a long-term risk to global sustainability presents an immediate financial risk today. While the risk of climate change is often viewed through a long-term lens, today it presents tangible health and financial risks to millions of retirees that will challenge policy makers round the world.

The World Health Organization (WHO) projects that climate change is expected to cause 250,000 additional deaths per year between 2030 and 2050, while the U.S. Environmental Protection Agency (EPA) reports that extreme heat has increased the risk of illness among older adults, especially those with chronic illness. Adding to that, Natixis report states that “retirees are finding insurance costs escalating as insurers seek to keep pace with climate and weather-related property damage.”

[Get more insight into these key threats, as well as detail on the how and why of country rankings. Download the full report here.


Cover photo by James Jose Jr. on Unsplash.
MinterEllison announces new guide on developments in climate risk governance and disclosure

MinterEllison announces new guide on developments in climate risk governance and disclosure

By Georgina Wade

A new guide from law firm MinterEllison is highlighting developments made in climate risk governance and disclosure that are critical to the provision of a true and fair view of financial position, performance and prospects, and to the management of misleading disclosure risks under the Corporations Act.

                  The guide, “Are your finance and governance teams ready? Responding to heightened expectations on climate-related disclosure and assurance”, contains a useful background to the evolution of climate change from an environmental to a financial issue, and goes on to capture contemporary developments in the realm of financial risk disclosure. Recent developments include the AASB/AuASB’s joint guidance on the integration of climate change-related risks into financial statement materiality considerations, to scenario-planning under the recommendations of the Taskforce on Climate-related Financial Disclosures.

                  This comes just after their recent Insight publication, “New developments impact climate change related risks”, examining recent developments that are likely to impact the way that Australian listed companies consider climate change related risk.

                  Click here to access the guide.

Learn more about Acclimatise’s work on climate risk disclosure here.


Cover photo by Brandon Jacoby on Unsplash.
Acclimatise becomes an official signatory of TCFD

Acclimatise becomes an official signatory of TCFD

Acclimatise today became an official signatory of the Financial Sustainability Board’s (FSB) Taskforce on Climate-Related Financial Disclosure (TCFD). The initiative, established by Mark Carney and Michael Bloomberg, has been central in providing momentum for climate change action in the financial services industry.

Acclimatise has worked with UNEP FI and the world’s leading banks to help consider how they might implement the TCFD recommendations. Through its work, Acclimatise has helped develop methodologies for assessing physical climate risk to loan portfolios and is a leading advisor on climate risk and opportunity to the financial services industry.

The company’s supporting statement under the TCFD reads:

“Aligning strategies to stabilise our financial and climatic systems is vital. Corporate and financial institutions have a significant role to play in this. The incorporation of TCFD recommendations in their governance systems and decision-making processes is in fact key if we are to ensure a sustainable and climate compatible future, particularly in light of unmet governmental climate targets. We are proud to support this initiative and we will continue to excel at developing methodologies and metrics to help corporates and financial services organisations to identify, quantify, and disclose physical climate risks and opportunities.”


For more information about Acclimatise’s work on climate risk and financial services click here.


Image: World Economic Forum: Mark Carney, Governor of the Bank of England. World Economic Forum, Davos, Switzerland. CC by 2.0.

Investor portfolios failing to account for climate risk says BlackRock

Investor portfolios failing to account for climate risk says BlackRock

By Will Bugler

Investors are under-pricing the impact of climate-related risks, including more frequent and intense extreme weather events, and need to rethink their assessment of asset vulnerabilities, according to a new report by the BlackRock Investment Institute.

While the physical manifestations of climate change are clear, including rising sea levels, and more intense hurricanes, wildfires and droughts, how investors incorporate these risks into their analysis is not.

The report, “Getting physical: Scenario analysis for assessing climate risks ” uses new tools and data to articulate the potential impact on different U.S. asset classes, marking an important next step as investors increasingly recognize the importance of integrating climate-related risk factors in the investment process.

“The combination of advances in data sciences, including geolocation data and climate modelling, have allowed us to more precisely assess the investment implications of climate-related risks” said Brian Deese, Global Head of Sustainable Investing, BlackRock.

“Asset-level analysis is key for investors. We find that the risk posed by more frequent and severe weather events such as hurricanes and wildfires are not fully reflected in the price of many assets, including U.S. utility equities. A rising share of municipal bond issuance is set to come from regions facing climate-related economic losses. And many high-risk commercial properties are outside official flood zones.”

Many investors recognize that climate-related risks are growing. However, until recently, most investors did not have access to data showing the potential impact at the asset level of both direct physical risks and indirect economic impacts as well. Working with Rhodium Group, BlackRock leveraged 160 terabytes of data to assess these climate-related risks facing specific asset classes, both today, and under a range of future climate scenarios reaching out to 2100.

Specific findings of BlackRock’s research include:

Municipal Bonds

  • Within a decade, more than 15% of the current S&P National Municipal Bond Index (by market value) would comprise metropolitan statistical areas (MSAs) suffering likely average annualised climate-related economic losses of up to 0.5% to 1% of GDP.
  • Looking out to 2080, an estimated 58% of U.S. metro areas will likely see GDP losses of up to 1% or more, with less than 1% set to enjoy gains of similar magnitude.
  • The New York City region faces annual losses equivalent to roughly 1% of GDP by late century.
  • Florida will be affected the most, with Naples, Panama City and Key West seeing likely annual GDP losses of up to 15% or more, mostly driven by coastal storms.
  • Miami’s current annual GDP losses are already more than 1% and projected to grow to an annualised 4.5% of GDP by the end of the century.

Commercial Real Estate and CMBS

  • The median risk of a building that backs a CMBS bond being hit by a Category 4 or 5 hurricane today has risen by 137% since 1980.
  • BlackRock is projecting a 275% increase in the risk of category 5 hurricanes between now and 2050.
  • More than 80% of properties tied to CMBS loans affected by recent hurricanes in Houston and Miami are outside official flood zones.
  • New York City is facing rising sea levels of up to three feet by the end of century exposing more than $70 billion of property to potential losses.

Utilities

  • Investors in utility stocks are quick to sell out of these names following an extreme weather event, with stocks down 1.5% on average over the ensuing 40 days.
  • However, these stocks recover quickly while the true economic losses are still being calculated, suggesting that investors are focused on headline risk rather than assessing utilities’ vulnerability to climate-related weather events.
  • BlackRock has generated a climate-risk exposure score for every U.S. utility based on a plant-by-plant assessment of physical risk, and finds that the most climate-resilient utilities tend to trade at a slight premium to their peers. This gap may become more pronounced over time as weather events turn more extreme and frequent.

Cover photo by Timon Studler on Unsplash.