How Climate Risk Could Impact Investments in 2025

Published: December 12, 2024.

This year is on track to be the warmest on record. Extreme weather that accompanies a warming planet has also become the new norm, according to industry experts that shared their insights on the recent Data Minds: Navigating Physical Climate Risk Disruptors. The World Meteorological Organization, which attended the UN Climate Change Conference COP29 last month, agrees, stating in a report that “The record-breaking rainfall and flooding, rapidly intensifying tropical cyclones, deadly heat, relentless drought and raging wildfires that we have seen in different parts of the world this year are unfortunately our new reality and a foretaste of our future.”¹

The panelists at Data Minds: Navigating Physical Climate Risk Disruptors identified a few reasons investors may consider integrating physical climate risk data into their investment strategies in an attempt to hedge the risk of these more frequently occurring events.​



Source: Data Minds: Navigating Physical Climate Risk Disruptors

The panelists also discussed how investors may be able to navigate these challenges and stressed the importance of:​



Source: Data Minds: Navigating Physical Climate Risk Disruptors

The Bottom-Line

Climate change is a reality that comes with major human and economic implications. As such, investors may want to consider how these physical risks as well as regulatory changes impact their investments and the strategies they use to navigate these challenges.

1 2024 is on track to be hottest year on record as warming temporarily hits 1.5°C, World Meteorological Organization, November 11, 2024, https://wmo.int​

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