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What is the impact of climate change on investors?

From banks and insurers to pension and mutual funds, 97% of 439 respondents believe global temperatures are rising. More than half say climate risks are already a factor in their investment decisions, according to "The Importance of Climate Risks for Institutional Investors" published in the March 2020 issue of The Review of Financial Studies. That's the finding of a first-ever survey of institutional investors conducted in part by the McCombs School of Business at The University of Texas at Austin.


"These investors have accepted that climate change is happening," said Laura Starks, finance professor at Texas McCombs, who designed the survey with colleagues Philipp Krüger of the University of Geneva and Zacharias Sautner of the Frankfurt School of Finance & Management. "They're trying to come to terms with how it's going to affect the risk and return of their portfolios."

The survey also reveals how institutions are starting to act. Their tactics range from asking companies to catalog carbon emissions to backing shareholder resolutions. If institutions are not satisfied with executives' responses, a few are divesting their shares. Such measures are only the beginning, the survey suggests. Within five years, fully 91% expect climate risks to be financially material to their investments.

In addition to climate change, there are many other factors that affect investments, and a similar research has been published on the Journal Finance Forum. Financial Forum is an open access journal which focuses on applied research in commercial banking, and has columns such as theoretical exploration, reform exploration, development strategy, financial court, operations management, business innovation, financial market, business innovation, international finance, and financial transfer. This journal is mainly for financial theory and policy researchers, economic workers, and economic institutions. We sincerely welcome submissions from everyone.

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