Print
Email
Share
Many clients have asked for our view on the argument that, even assuming that scientists' projections of the likely effects of climate change are broadly correct, the effects will be felt only slowly, with little effect on asset prices over mostinvestors' time horizons.
We judge this argument as flawed, for three, linked, reasons. First, markets anticipate even slow-moving variables, such asclimate change. Second, policy made in the name of climate change could have an almost immediate, up-front effect on asset prices. And third, markets anticipate policy itself. In this way, expected future effects of climate change become brought right forward to the present.
Fundamentally, the economic case for considering climate change ultimately depends on thescience. Our judgement is thatthe science will increasingly be seen as broadly correct; that this view will be progressively accepted by the weight ofmarket opinion; and that, while the adjustment of asset prices has begun, full adjustment will take years, rather than months.