Climate Risk Focus May Hurt Vulnerable Nations: Stranded Assets

As investors and regulators increase scrutiny around the climate risk, the investment decision-making process is impacted. Eiopa, the European regulator for pensions and insurance companies is increasingly evaluating the risk climate change presents to government bonds. As sovereigns increasingly intervene in private markets, notable mortgage markets, this means a variety a sectors could see additional scrutiny including residential real estate. Investors are becoming increasingly concerned with two subsets of climate risk: transition risk and physical risk. Concerns about risk reverberation at a micro-level to a global-level are also among investor concerns.