Breakingviews - Investors add $10 trln activist wrench to H2O risk
MELBOURNE, Aug 22 (Reuters Breakingviews) — Get ready to hear rafts of executives blame “drought”, “flood” and “natural disaster” for poor earnings in the next few months. On some levels, that’s understandable: large swathes of the Americas, Europe, Asia and Oceania have been suffering from either too little or too much water, and sometimes both in quick succession. But it’s also tired old language that obfuscates how such financial pain is a consequence of long allowing water risk to play second fiddle to greenhouse-gas emissions in battling climate change. Now DWS (DWSG.DE), Fidelity International, CalPERS and some 60 other investors with almost $10 trillion in assets between them are trying to change that.
Related Knowledge Center: Climate: water resources
Extreme weather and prolonged drought in some regions are affecting electricity generation — notably hydroelectric and nuclear power.
Related Knowledge Center: Climate economics
Climate change is now a driver of the world’s economy. The impact is profound:
- Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
- Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
- Investment in carbon capture and storage technologies is increasingly rapidly.
- Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases.
On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”