Measure and mitigate climate risk in portfolios

THE 2020 Covid-19 pandemic was an unexpected event that took portfolio managers and investors around the world by surprise.

Most, if not all, investors experienced increased volatility in their portfolios, but as we approach the end of 2020, many diversified equity investment portfolios would have recovered by various degrees due to positive news from the anticipated recovery of the global economy and impending Covid-19 vaccines mass rollouts.

As portfolio managers and investors usher in the new year, I wish to revisit an even bigger risk looming in the coming decades: climate risk.