The impact of climate change on the global economy is likely to be significant and long-lasting. Advances in technology, policy action by governments and the physical effects of climate change will combine to reshape the investment landscape radically.
We use a model of the global economy to quantify exposure to climate-related risk. Developed over 20 years ago E3ME was designed by Cambridge Econometrics specifically for this type of analysis and is continually updated and refined. It can:
Test the impact of different global temperature pathways (1.5˚C, 2˚C, 3˚C and 4˚C) across regions and sectors; and
Assess the impact of different climate-related risks, including:
- Advances in energy technology which reduce the need for fossil fuels
- Policy action by governments to mitigate climate change, including carbon taxes, energy efficiency regulations and renewables subsidies; and
- The physical manifestation of climate change
The analysis provides the key economic indicators that you need to develop ‘climate risk-aware’, sustainable investment portfolios.
Some challenging questions we can help you answer:
- What are the climate-related risk and opportunity profiles of different economic sectors and geographies?
- Are climate exposures reflected in our risk assessment processes and TCFD-compliant reporting?
- How will the climate transition in the real economy impact macrofinancial stability?
