Weathering Climate Change
Exposing the hidden portfolio vulnerabilities and potential opportunities in the transition to a lower-carbon world.
NEWARK, N.J., Feb. 11, 2021 - Our planet’s climate trajectory for the next 15 years is already decided, scientists warn—but what actions investors take today can still have tremendous impact. New research by PGIM, the $1.5 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU), finds that while most investors recognize climate change as a major risk, too few see the opportunities ahead that will help pave our way to a greener economy.
The research, Weathering Climate Change: Opportunities and Risks in an Altered Investment Landscape, draws from the insights of more than 45 investment professionals across PGIM’s fixed income, equity, real estate, private debt and alternatives businesses; interviews with 30 leading academics, economists, policy-makers, scientists and climate change investors; and a proprietary survey of 100 global institutional investors to better understand their current strategies around climate change.
According to PGIM’s survey, nearly 90% of global investors believe climate change is very or somewhat important but 40% have yet to incorporate it into their investment process.
“The humanitarian and economic catastrophe unleashed by COVID-19 revealed investor’s vulnerability to slow-burning risks with unpredictable timing,” says Taimur Hyat, PGIM’s chief operating officer. “Climate change is the next crisis that will radically reshape investors’ risks and opportunities. Investors that take action now can play an influential role in driving the global transition to a low-carbon economy while optimizing their portfolios for a greener future.”
The research demonstrates that markets have only just begun to reflect climate risks in asset prices and predicts that a range of catalysts will accelerate the gradual, or potentially abrupt, repricing of assets to more fully reflect climate risks. This mispricing of climate risks creates opportunities for active, long-term investors. These range from identifying tech-forward companies adept at transitioning to the new “low-carbon economy,” to incorporating physical and transition climate risk in analyzing real assets, to supporting startups engaged with transformative technologies like carbon capture and storage.
Exposing the hidden portfolio vulnerabilities and potential opportunities in the transition to a lower-carbon world.
Learn More
For more, visit the microsite for Weathering Climate Change: Opportunities and Risks in an Altered Investment Landscape, the latest in PGIM’s Megatrends series.
PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 largest asset managers in the world* with $1.5 trillion in assets under management as of December 31, 2020. With offices in 16 countries, PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including public fixed income, private fixed income, fundamental equity, quantitative equity, real estate and alternatives. For more information about PGIM, visit pgim.com.
Prudential Financial, Inc. (PFI) of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. For more information please visit news.prudential.com.
* Prudential Financial Inc. (PFI) is the 10th largest investment manager (out of 527 firms surveyed) in terms of global assets under management based on Pensions & Investments’ Top Money Managers list published on June 1, 2020. This ranking represents global assets under management by PFI as of March 31, 2020.
Exposing the hidden portfolio vulnerabilities and potential opportunities in the transition to a lower-carbon world.
How institutional investors can navigate the far-reaching impact of the rapidly changing climate.
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