Financial institutions, like all investors, rely on their research and analysis to uncover material information in order to improve investment strategies and attain higher returns. The effects of climate change have already had material effects on macro-economic indicators often used by institutional investors in Asset/Liability Management (ALM) and Strategic Asset Allocation (SAA). Incorporating the effects into investment strategy should therefore be a key component for predicting asset performance as climate impacts become more tangible for investment returns.
This paper, ‘Climate Scenario Analysis for Systemic Climate Risk’ by Ortec Finance and CFA (Climate Finance Advisors), highlights the importance of taking systemic, macroeconomic climate risks and opportunities into account when making strategic investment decisions. The paper also explores how investors are able to act on insights gained from such analysis. Four types of institutional investors are examined in this paper, each of which has slightly different ALM and SAA strategies given how they invest, their overall risk appetites, and investment horizons. Our Climate & ESG Solutions team specializes in integrating climate and sustainability insights into standard investment process modelling and analysis. This enables financial institutions to gain insights into quantified and qualitative climate risks and opportunities, via our ClimateMAPS – climate scenario analysis solution.
To read the full paper “Scenario Analysis for Systemic Climate Risk”, please fill in your details and download your copy.
Contact
Sophie Heald
Senior Climate Specialist, Climate & ESG SolutionsRelated Insights
-
03 December 2024PRESS RELEASE: US pension plans set to increase spending on scenario modeling, says new surveyUS pension plans see room for improvement on their current scenario and risk modeling activities.
-
02 December 2024Climate risk assessment – European insurance companiesLearn how climate change impacts European insurance companies, via an analysis on a reference portfolio that represents their average asset allocation.
-
02 December 2024Ortec Finance warns on impact of climate change on European insurance company investmentsOrtec Finance releases inaugural insurance climate risk report, analyzing the average allocation of a European insurance company derived from the EIOPA.
-
02 December 2024Charting the unpredictable: Harnessing data-driven solutions to enhance investment decision makingDiscover how pension funds are navigating challenges including ageing populations, DC transitions, climate change, regulatory shifts, and market uncertainties.
-
27 November 2024Ortec Finance warns of the impact of climate change on pension fund returns worldwideOrtec Finance releases inaugural global pension fund climate risk report, analyzing publicly available data from 150 pension funds in the US, Canada, UK, the Netherlands and Switzerland.
-
26 November 2024Defined Benefit (DB) pension buy-out under climate stressExplore the potential impacts of climate and transition risks on DB pension scheme buy-outs with climate scenario analysis
-
26 November 2024Should climate change's impact on liabilities prompt life insurers to adjust investment strategies?Explore the interdependency between liabilities and assets from a life insurer’s perspective and how to adjust investment strategies for optimal performance
-
22 November 2024Climate risks facing the pension industry worldwideLearn how climate risk exposure and resilience varies among pension funds within and across five of the six largest pension systems worldwide
-
18 November 2024Ortec Finance appoints Koen de Reus to Head of Client Servicing, Climate & ESG SolutionsKoen de Reus will lead a team of climate risk professionals to help financial institutions measure, manage, and monitor their portfolio’s climate risk exposure.