Investors will face major hurdles as the impact of climate change takes hold, experts have warned.
A lack of reliable predictive data coupled with an inconsistent global approach to climate change would hinder investors who are choosing to put cash into businesses.
Speaking at Insurance Times climate change conference Alan Brown, head of investment for global asset management firm, Schroders, said investment managers must start taking climate change into account when selecting investments.
He said: “Fiduciary investors believe their prime role is to return best profits from their investments. They continue to have a whole portfolio of investments but will bias forecasts up a bit towards companies which are environmentally friendly and penalise those who are not.
“This approach delivers a higher return with a lower risk.”
However, Raj Thamortheram, responsible investment director for AXA Investment managers warned that climate change presented both a “challenge and opportunity”.
He said: “We need to price on expectations of reality not on previous experience and that is quite different. We are dealing with a wide range of estimates and forecast are hard to come by. We will be slow in responding because we don't know what is going to happen.
“The answer is effective risk management. Large insurers are already starting to make this part of their mainstream pricing systems.”
