Top investors warn markets might face risks over lax climate forecast

Top investors warn markets might face risks over lax climate forecast

Financial markets risk major disruptions by relying on forecasts that underestimate the impact of climate-change policies that are expected to abruptly tighten the next decade, a leading group of investors had warned.

The report made by the U.N.-backed Principles of Responsible Investing (PRI), representing investors with $86 Trillion worth of assets under management, joined a growing chorus of warnings that forecasts and investments by oil and gas companies are not aligned with the pace needed to meet energy transition targets.

PRI also released a forecast which it said “aims to fundamentally reset investors’ forward-looking risk management, strategic asset allocation and company engagement.”

The study, branded as the Inevitable Policy Response (IPR), predicts “an abrupt and disruptive” government policy response to climate change by 2025, which is expected to be the “tipping point”.