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Article

5 Aug 2015

Author:
Katy Lederer, New Yorker

The New Economics of Climate Change

…Breaking climate-risk management out into four major factors (…technology, resource availability, impact, and policy), the authors recommend that long-term investors…“focus on risks and opportunities across and within asset classes.”...When most people think of the global financial system, they think of the investment banks, the hedge funds, and the distressed-asset investment firms. These are the frenetic first-movers in the market...Pension funds prefer much longer time horizons. They eschew long-term uncertainty, and in this they are the most obvious financial allies of those who are working to curb climate change…Losers like coal, the returns of which, according to the report, “could fall by anywhere between 18% and 74% over the next 35 years,” should be jettisoned to make room for new investments in renewables…In a time of accelerating climate change, an increasingly volatile reality will eventually come up against the limits of modern portfolio theory. The definition of fiduciary duty is therefore starting to expand, to include not only traditional and largely passive investment policy but also active stewardship of global average temperature… [refers to Chevron, Deutsche Bank, ExxonMobil, Mercer]