Investors are underestimating the physical risks of climate change

THE climate crisis is a rapidly unfolding reality. Climate scientists have long warned that we must limit global warming to 1.5 degrees Celsius to avoid triggering climate tipping points and face the worst impacts of climate change. Yet, the data paints an uncomfortable picture: last year was the warmest year on record.

The urgency to reduce emissions by around 43 per cent by 2030 to limit global warming to 1.5 degrees Celsius is becoming increasingly obvious; but are we on track to meet this goal?

There is a growing disconnect between climate science and the climate-scenario modelling undertaken by financial firms. The result is an underestimation of the risks posed by climate change – a miscalculation that could have significant implications for global financial markets.