Climate change and investments: Steps for understanding climate risk

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Across all industries, there is a widespread and growing acknowledgment of climate-related risks and opportunities. Regulators expect large organizations to measure, report, and disclose their risks from the changing climate to avoid financial shocks. Investors are demanding that businesses measure their exposure to physical climate risk, which they view as material and significant, and many are beginning to divest from carbon-intensive assets.

 The field of climate finance is complex and difficult to navigate; even with research, benefits managers and advisors are often left with more questions than answers regarding how to serve their clients in this area. The following article suggests steps for understanding climate risk which can serve as a resource for advisors.