LONDON – Climate change could lead to cutting the value of global financial assets by $2.5 trillion, according to a recent study published by a British daily newspaper.
According to the possible scenarios, often used by the regulators to check the financial health of firms and economies, the losses could affect 17 percent of the world’s assets.
“Our work suggests to long-term investors that we would be better off in a low-carbon world,” Prof. Simon Dietz of the London School of Economics, the lead author of the study, quoted by The Guardian.
Dietz explained that awareness in the financial sector was, however, low.
“Physical climate change impacts are a systemic risk on a massive scale,” Ben Caldecott, the director of the sustainable finance program at the University of Oxford, said, according to the daily.
“Investors can do much more to differentiate between companies more or less exposed and they can help reduce the risk to the global economy by supporting ambitious action on climate change,” Caldecott added.
The new study was published in the peer-reviewed journal Nature Climate Change and used economic modeling to estimate the impact of unchecked climate change.