Climate Finance: Integrating Climate Change Mitigation and Adaptation Considerations into Investment Decisions
Finance has a critical role in supporting the transition to a resilient, net-zero emissions future. Barriers to unlocking this potential include a lack of access to expertise, data and research tools for integrating climate change modelling into investment decisions. This research project will help address these gaps.
The University of Victoria Peter B. Gustavson School of Business in partnership with British Columbia Investment Management Corporation (BCI) and PICS will co-develop decision-making tools and frameworks for integrating climate change risk evaluation and climate mitigation opportunities into investment portfolios. The work will build on BCI’s existing climate change scenario risk analysis and valuation framework, and incorporate the best available academic and applied research.
The project will also evaluate global government stimulus and green recovery packages in response to the COVID-19 pandemic, and their potential implications for investment management approaches supporting the transition towards a net-zero future.
Large asset owners, such as pension funds, need to address climate risks and opportunities in order to ensure long-term sustainability for plan beneficiaries. Asset owners can also accelerate the shift to a net-zero economy through their portfolio choices and investment activities.
To fulfill their fiduciary duty and make long-term, strategic choices for clients, large asset owners need to integrate climate change into their investment framework: (1) quantify and manage the physical and transition risks from climate change, and (2) identify investment opportunities associated with a low carbon economy while protecting investors’ financial security.
Insights from this research will be useful for investors in Canada and beyond. This project will share the knowledge and tools on climate finance with external audiences to help incorporate the findings into educational curricula for university students, industry standard setters, and professional designations.
Opportunity Project: Began, Jan. 1, 2021 / Project Duration: Three years