There’s always been some risk to investing. But climate change is posing a new kind of threat to investors.

Kapur: “They see this as a risk to their portfolio and there’s no way to diversify away from this risk.”

That’s Namrita Kapur, who leads finance strategy for the Environmental Defense Fund. She explains that no industry is immune to the effects of climate change. This means the typical strategy of spreading out investments across various industries may be less effective than in the past.

Real estate, for example, could be slammed by rising sea levels. Telecom might experience massive outages from more severe storms. And so on.

Kapur says that’s just one reason for investors to be concerned about climate change. Another is that global warming pollution often creates immediate costs to the bottom line. For example, take methane leaks during natural gas production.

Kapur: “This represents lost product and thus lost revenue, and that’s something investors want to take into consideration in the assessment of a company.”

Kapur says some investors are now examining companies’ environmental practices and demanding policies to address environmental risks.

Climate action and safer investing? Sounds like a capital idea.

Reporting credit: ChavoBart Digital Media.
Image graphic: Created by David McCarthy.